LONDON, 21 September 2004 — The course of oil prices is “largely out of the hands” of both OPEC and the international energy industry, with markets set to remain tight over the coming months, an energy consultancy warned yesterday. The Organization of Petroleum Exporting Countries is estimated to have spare production capacity of no more than 1.5 million barrels per day (bpd), mostly in Saudi Arabia, the Center for Global Energy Studies (CGES) said.
“This leaves only the thinnest margin to cope with the unexpected and the market is worried that it could quickly be used up in the event of an interruption to supply or a cold winter (in the northern hemisphere).” OPEC production in the third quarter of 2004 is estimated at 29.19 million bpd, excluding Iraq which is not part of the group’s system of output quotas, the consultancy said in its monthly oil report.
Meanwhile, oil prices climbed to the highest level for almost one month yesterday after Russia’s embattled oil giant Yukos slashed deliveries to China and as traders fretted over the impact of hurricanes on supplies.
The price of Brent North Sea crude oil for delivery in November rose 28 cents to $42.73 per barrel in late afternoon deals. Prices touched $43.17 in early trading, the highest level since Aug. 23. On the New York Mercantile Exchange, light sweet crude for October delivery advanced 71 cents to $46.30 in early deals, also a near-one month peak.
Yukos said it was partly suspending its oil shipments to China, halting deliveries to the China National Petroleum Company, because of difficulty in paying for transport costs. A Yukos spokesman told AFP that CNPC, which accounts for 60 percent of Yukos’ oil sales to China, was informed Friday of the suspension of deliveries, which would take full effect on Sept. 28.
“Prices are up because of Yukos and the US stocks (supplies),” GNI Man-Financial trader Robert Laughlin said. “The US stocks are a big concern as there is still news that oil imports in the US could be disrupted by the hurricane.”
The US Energy Department reported last week that crude oil inventories, or stocks, tumbled by 7.1 million barrels to 278.6 million in the week to Sept. 10, reaching the lowest levels in nearly seven months. Traders are bracing for further falls in the wake of Hurricane Ivan.