DUBAI, 3 February 2008 — OPEC’s output policy decision in March will depend on how much crude oil stocks have been drawn down during the winter, Minister of Petroleum and Mineral Resources Ali Al-Naimi told Al Arabiya Television.
Naimi said predictions of output decisions at the OPEC meeting in March were premature, but inventories were currently at the low end of the five-year average range. “I believe that by the second quarter, stocks will be near the mid-point of the five-year range,” Naimi told the station on the sidelines of the latest OPEC meeting in Vienna. Al-Arabiya broadcast his remarks yesterday. OPEC decided on Friday to keep oil supplies unchanged.
Demand for oil usually falls in the second quarter, as the northern hemisphere winter comes to an end.
Naimi said the second quarter was usually used to build up stocks drawn down during the winter, and how much leeway OPEC would allow for stock build-ups in the spring would depend on how much fuel was used during the winter.
The Organization of the Petroleum Exporting Countries decision essentially rejected appeals from Washington for more oil to lower fuel bills and bolster its slowing economy.
Naimi said OPEC was constantly coming under pressure but much of it was political rather than grounded in economic facts.
World oil prices were not under the exclusive control of OPEC, Naimi added, citing speculation and geopolitics as well as environmental conditions as important factors affecting prices. OPEC made its decisions based on supply and demand fundamentals, he said.
Meanwhile, the White House on Friday said that having a reliable, steady and predictable supply of oil is a good thing for global growth, following OPEC’s decision to keep supplies unchanged.
“Everyone is fully aware that having a reliable and steady and predictable supply of oil is a benefit to the global economy,” White House spokesman Tony Fratto told reporters traveling with President George W. Bush. “I think they (OPEC) do listen to us, I think they do listen to the market also,” Fratto said.
As growth slows, oil markets will be watching closely to see how far OPEC goes with supply curbs to prop up prices.
Many in the 13-member organization take the view that oil plays no part in a downturn led by the US housing market crisis and the resulting credit crunch.
Washington does not see it that way. Bush, during his Middle East trip, had made the point that high oil prices can result in a drop in demand and the White House emphasized that point again on Friday. “That’s not in the interests of oil producing countries. We hope that they understand that their decisions on oil production have a real impact on the economy, and the use of this commodity,” Fratto said.
“It’s important for them to understand that all of their decisions have an impact on the economy and are reflected in prices. And when you see that reflection in prices, the markets respond, and they don’t always respond in ways that support prices that way,” he said.
