LONDON, 24 August 2004 — World oil prices fell yesterday on easing supply fears, as crude exports from Iraq’s southern pipelines resumed close to normal levels, analysts said.
The price of benchmark Brent North Sea crude oil for delivery in October fell 14 cents to $43.40 per barrel in late afternoon trading here.
New York’s main contract, light sweet crude oil for delivery in October dropped 19 cents to $46.53 per barrel in early deals.
The September contract expired Friday, closing at $47.86, having reached an all-time high of $49.40 earlier in the day. An easing of prices was likely to be only a brief respite, analysts warned, especially as fighting rumbled on in Iraq. “It is just a little bit of a pull back (for prices), but I still think we are in an upper trend,” Investec analyst Bruce Evers said.
“It is a just a pause for breath,” he added.
There was better news concerning Iraq’s oil output as exports from southern Iraq continued at 83,000 barrels per hour yesterday, an official of the South Oil Company told AFP. Exports had been cut dramatically from the normal level of 85,000 barrels per hour, for almost a fortnight ahead of near-full resumption Saturday, due to threats to blow up oil pipelines feeding the two southern terminals.
“Iraqi supplies remain precarious,” the Center for Global Energy Studies warned yesterday.
“The Yukos saga rumbles on and oil demand growth continues to look very buoyant indeed,” the London-based organization said in its Monthly Oil Report.
Meanwhile, OPEC insisted yesterday that high oil prices were a result of speculation and vowed to provide enough crude to calm global markets, while an energy research group warned prices could remain high for some time. “There are two main factors (for the price hikes), a fundamental one is the rising demand especially in China and India,” OPEC Secretary General Maizar Rahman said. “We also have problems downstream” in the United States where refineries were working at full capacity, as well as non-fundamental geo-political factors in major producing countries like Venezuela, Nigeria and Iraq, the Indonesian OPEC official added.
As a result “people say that $10 to $15 a barrel is due to non fundamentals, to speculation,” Rahman added, repeating an explanation already put forward by the Organization of Petroleum Exporting Countries.
OPEC is collectively pumping around 30 million barrels per day, but could decide to increase its total by 1-1.5 million bpd when it meets on Sept. 15.
According to OPEC President Purnomo Yusgiantoro, the organization is waiting for other producers to follow Saudi Arabia’s lead in utilizing available spare capacity.
Rahman said: “OPEC is always trying to keep the market well supplied.”
While it would use its spare capacity to help meet demand, “the non fundamental (factors are) beyond OPEC’s control,” he stressed.
“Total OPEC crude oil production rose from 24.322 million bpd in 2002 to 26.885 million bpd last year, with only two member countries (Iraq and Venezuela) failing to record output increases,” the organization’s OPECNA news agency reported.
“The organization’s share in world crude oil exports improved from 47.2 percent in 2002 to 48.7 percent last year, while over the same period, its share of world oil production improved from 38 percent to 40.1 percent,” it added.
