Jun 5, 2000 - 09:32 AM

Naimi: Oil Producers Will Intervene to Moderate High Oil Prices The Associated Press

RIYADH, Saudi Arabia (AP) - Oil producers will soon take steps to moderate the recent surge in oil prices, Saudi oil minister Ali Naimi said in remarks published Monday. "Saudi Arabia and other major oil producers are not happy with the artificial high prices that might be harmful to producers and consumers. Therefore, we are currently examining carefully the cause of the current high oil prices," Naimi said in an interview with the official Saudi Press Agency, which did not say when the interview was conducted.

He said that while some early reports indicated oil prices increased in the last couple of weeks because of a possible shortage in U.S. gasoline supply, more recent reports indicate that demand for oil might be higher than expected.

"There are signs of strong demand growth in Asia, and the latest data from the United States indicates that there was a stocks drawdown in both products and crude, which is not normal for this time of year," Naimi said.

Producers are currently assessing the situation in the oil market and if there are changes in the fundamentals, as some recent reports indicate, then some actions might be taken, and as soon as possible, in order to stabilize the market and reduce the recent "abnormal" surge in oil prices, he said.

Naimi said the goal is to make sure the market is well balanced and that the price is stable and at a level which is acceptable for producers and consumers.

"As you know, the goal of Saudi Arabia is a stable oil market in terms of supply and demand and a moderate oil price that is acceptable to oil consumers, generates good income for oil producers and the industry in general and does no harm to world economic growth," he said.

Until now, recent comments made by many oil producers, including Saudi Arabia, have indicated that OPEC doesn't see any need for increasing output as things stand and that it's highly unlikely it will take a decision to do so June 21 at its extraordinary meeting in Vienna.

But Naimi's comments indicate that this has now become a possibility once more. Saudi Arabia is the world's largest crude oil producer and exporter.

Friday, light sweet crude oil futures on the New York Mercantile Exchange, settled at $30.35 a barrel, having hit a high of $30.65 a barrel.

The rise in crude oil prices in the past month has been attributed by many OPEC officials to a potential shortage in U.S. gasoline supplies and not to a crude shortage.

http://ap.tbo.com/ap/breaking/MGI178E549C.html

-- Martin Thompson (mthom1927@aol.com), June 05, 2000