DOHA, 22 November 2005 — OPEC should not extend its offer to sell its remaining 2 million barrels per day (bpd) of idle crude production capacity due to large amounts of oil now in transit, Qatar’s oil minister said yesterday.
“I don’t see a good reason” to extend the offer, Qatari Oil Minister Abdullah al-Attiyah told reporters in Doha. “I see a lot of floating tankers and the number is increasing every day.” “There is more oil and no one wants to buy it,” he added.
The Organization of the Petroleum Exporting Countries, which has been pumping near full throttle this year in a bid to get prices down, agreed in September to offer refiners its remaining spare capacity through the end of this year, but says there have been no takers. The organization next meets on Dec. 12 in Kuwait to plot output policy for early next year.
Saudi Arabia said at the weekend that there was no need to take more measures - such as cutting actual production - since the market was stabilizing.
Crude oil inventories in the United States have built up a hefty surplus to their seasonal norm due to high OPEC exports and a reduction in refinery demand, helping undercut prices that soared as high as $70.85 a barrel in late August.
Swelling crude inventories and recovering US Gulf production have raised concerns of a potential supply glut when seasonal demand ebbs in the second quarter of next year. “It seems to me now that the big indicator is that there is more oil than the market can absorb,” Al-Attiyah said. “I’m concerned about the second quarter.”
Meanwhile, world oil prices gained ground yesterday amid colder weather across the United States and Europe, and forecasts of a harsh northern hemisphere winter that may stretch heating fuel supplies.
New York’s main contract, light sweet crude for delivery in January, rose 49 cents to $57.70 per barrel in pit deals. In London, the price of Brent North Sea crude for January delivery gained also 49 cents to $55.37 per barrel in electronic trading. “Crude oil futures bounced higher from a five-month low... as forecasts called for colder weather this week in the United States,” said Sucden analyst Sam Tilley.
He cited weather forecasting group Accuweather, which said last week that the US northeast was due to see temperatures 2.0 degrees Fahrenheit lower than normal this winter.