Oil price unmoved by Opec increase

news.bbc.co.uk Monday, 13 January, 2003, 05:59 GMT

Increased supplies are little comfort for the US

Oil prices have remained unmoved as Organisation of the Petroleum Exporting Countries (Opec)'s agreement on Sunday to increase supplies is considered inadequate to meet US needs.

Oil has been trading at about $30 per barrel as a US war with Iraq and strike in Venezuela, the world's fifth largest exporter, has pushed US reserves to near 26-year lows.

Opec "stabilising" supplies

"There are delays in getting oil from the Middle East to the US," said David Thurtell, commodities strategist at the Commonwealth Bank in Sydney.

"The global market is going to remain tight with ongoing war fears," he added.

Deliveries from the Middle East take between four to six weeks to reach the US.

US light crude see-sawed in Asian trade, falling by almost 50 cents to $31.20 a barrel, then rising above its opening price before returning to $31.68 at 0512 GMT.

Trade on the International Petroleum Exchange (IPE) in London, the world's main oil market, begins at 0900 GMT.

Supply threats

The Venezuelan strike and the looming threat of war had pushed US crude prices to a two-year high of $33.65 at the end of December.

The high cost of oil could threaten the global economy which is still struggling to show any significant growth.

Oil shipments by Venezuela, the world's fifith biggest exporter which supplies 13% of US needs, still down to about 20% of normal export levels.

Iraq sells up to two million barrels per day on the international market but that would be stopped if there was a war.

Opec increased official production by 1.5 million barrels per day (bpd) during the emergency meeting in Vienna.

"Opec is trying to send a very strong message that it will do its utmost to stabilise demand and supply," said the cartel's president Abdullah bin Hamad Al Attiyah.

Another Opec meeting is scheduled on 11 March.