OIL - IEA warns oil market of price spike - notice no mention of Y2k or Venezuela probsgreenspun.com : LUSENET : TimeBomb 2000 (Y2000) : One Thread
FOCUS-IEA warns oil market of price spike
Reuters Story - January 20, 2000 06:18 Jump to first matched term
(Adds IEA warning of further rise in prices)
By William Maclean
LONDON, Jan 20 (Reuters) - The world's worsening oil supply shortage may trigger an unpleasant rise in prices if OPEC fails to hike output, the International Energy Agency said on Thursday.
"The market needs more oil now," the West's energy watchdog said, detailing further falls in oil inventories that have sent prices to nine-year highs.
"Stocks have been drawn down sharply," the Paris-based agency said in its Monthly Oil Market Report.
If output restraint by the Organisation of the Petroleum Exporting Countries continued, the global shortfall would be two million to three million barrels per day (bpd) in the first quarter of 2000 and one to 1.5 million in the second, it said.
The agency said OPEC appeared haunted by fear of another price collapse if it boosted output, as happened after a meeting of the producer group in Indonesia in 1997.
"There is a danger that by not acting now, an opposite effect, ultimately as mutually unpleasant for producers as consumers, may now be in the offing," the IEA said.
SOME OIL DEMAND MIGHT GO UNMET
OPEC's unusual discipline in curbing output has lifted prices 2-1/2 times their sub-$10 lows hit a year ago, helping repair financial damage inflicted on producers by a 1998 glut.
The report said stocks in industrialised countries fell by 1.93 million bpd to 2.6 billion barrels in November, their lowest in a decade apart from 2.54 billion in November 1996.
Further U.S. stock falls in December appear to have pushed inventories in Organisation for Economic Cooperation and Development countries under an end-1996 low for year-end levels.
"With stocks at the end of December at their lowest year-end levels in a decade, additional drawdowns become exceedingly difficult," the Paris-based agency said.
"If these stocks are not available, some demand will go unmet," the report said.
The United States led the global November stockdraw, as sharply lower imports and reduced refinery runs drove down both crude and product stocks.
North American inventories fell by more than 1.1 million bpd and European OECD member countries contributed 750,000 bpd.
The agency raised its forecast of world oil demand in 2000 by 200,000 bpd to 77.3 million bpd, representing a rise of 2.4 pecent from average 1999 levels.
The IEA said demand in the fourth quarter had been extremely strong at 77.3 million bpd as buyers took precautions against the Y2K bug. Y2K stocks were now overhanging the market but fundamentals suggested significant tightening.
"The numbers show markets that are tight and getting tighter," the IEA said. "Stocks are likely to continue to decline until more oil is made available by OPEC and other producers.
LIMITED Y2K DESTOCKING EXPECTED
Supply from producers outside of OPEC was growing only slowly in response to a price rally driven by OPEC output cuts, the agency said.
A mild winter so far had had only a modest effect on demand, and destocking by buyers who had built supplies as a precaution against the millennium bug was not expected to be large.
Increased production from Saudi Arabia edged OPEC compliance with pledged output cuts down to 78 percent in December from a downwardly revised 81 percent in November, the agency said.
Total OPEC supply dropped by 600,000 bpd to 25.6 million bpd due to sharply lower production and exports from Iraq, which does not take part in the cutback agreement.
But David Knapp, head of the oil markets division at the IEA, said OPEC's slippage appeared in part due to customer requests for additional barrels in December. That was prompted by precautionary Y2K stockpiling and OPEC output in the early months of 2000 could be more indicative of cartel discipline
-- robert bright (email@example.com), January 20, 2000
Here in the Pacific Northwest the local, helpful, radio news hypnotists have been preparing the masses for much higher gas prices come this summer's vacation driving season.
They say that there will be "plenty of gas to go wherever you want" it will just "cost you more".
They do not say why it will cost more, but I found the allusion to the fact that it would not be due to shortages velly, velly interesting.
-- JIT (firstname.lastname@example.org), January 20, 2000.
I like that. If gas costs more, you'll want to drive less, so you will indeed be able to go anywhere you want to go.
-- DeeEmBee (email@example.com), January 20, 2000.