28/08/2000 09:18 - (SA) Opec Pres. says no oil move til Sept 10

Mexico City  Opec President and Venezuelan Oil Minister Ali Rodriguez said on Sunday that oil heavyweights would make no move on crude output until the cartel's September 10 meeting.

He blamed red-hot oil prices on low stocks of distillates and not on oil supplies.

The Opec chief told reporters on the first day of a trip to the Mexican capital that oil price levels, now hovering near 10-year peaks, stemmed primarily from a slide in refining activity and low stocks of products like gasoline.

"If there is no refining then inventories drop. This is the problem that we have had all year," Rodriguez said. "It's a problem that is beyond Opec's control."

Still, Rodriguez stressed his nation was committed to an Opec price band mechanism, which triggers an increase of 500 000 barrels per day (bpd) if a basket of Opec crude averages above a $22-$28 band over a period of 20 working days.

"We will stick by what we have already agreed on with Opec," said Rodriguez.

Oil producers in recent weeks have been pushed to pump out more oil to temper the strong prices, which were above the band's outer limit for nine straight days through Thursday.

Venezuelan oil officials, for example, said last week the cartel was likely to come under pressure to hike global crude output by some 500 000 bpd at a September 10 meeting in Vienna.

The Opec President said he had met with Mexican counterpart Luis Tellez on Sunday to exchange opinions on world oil markets. Prior to the meeting, Rodriguez said he did not plan to negotiate the terms of a production increase with Mexico.

The two nations, among the top three foreign suppliers of oil to the United States, planned to issue a statement on Monday.

Rodriguez was also expected to meet with members of President-elect Vicente Fox's transition team during the Mexico visit, which will be followed by a September 3 trip to oil power Norway.

WARNING ON LOW INVENTORIES

Although Mexico's Tellez has been reticent in recent days on his nation's oil stance ahead of the Vienna meeting, President Ernesto Zedillo warned that too-high prices hurt not only nations that must import the commodity, but also global economic growth.

Zedillo, speaking at a summit in Guatemala on Friday, said scant world inventories must be "altered" in the short term to provide relief to the current lofty prices.

Rodriguez on Sunday questioned recent reports of low US crude stockpiles and said these levels would be reviewed carefully.

"Where are these barrels going?" Rodriguez said. He added that the drop would normally be explained by refining activity, but that this "was not the case".

Mexico is not a member of Opec but it has played a key role in orchestrating last year's supply cuts designed to boost flagging prices. It was also instrumental in bringing about this year's easing of the supply curbs.

Fox, who takes office December 1, has said he could seek increased oil output in December or January to take the pressure off the rocketing prices.

http://news.24.com/News24/Finance/On_the_Beat/0,1466,2-8-126_903523,00.html

-- Martin Thompson (mthom1927@aol.com), August 28, 2000