OPEC Chief: No Shortage in Oil Supplies

seattletimes.nwsource.com By ERIK T. BURNS Dow Jones Newswires

OPEC Secretary-General Alvaro Silva said Friday he is worried about the current high level of oil prices, but said there is no shortage in supplies."We believe that the problem is not the supply. The market is well-supplied," Silva said, while attending the World Economic Forum's annual meeting. "OPEC is worried about the level of prices," he added."At present, the problem is the threat of the war (with Iraq), the nervousness in the market, and the situation of Venezuela," Silva said, referring to the seven-week strike that has crippled Venezuela's oil industry and reduced exports to a trickle.

But Venezuelan output is increasing, he said. The country is currently producing around 1.2 million barrels a day, and expects to increase that to 2 million by the end of February. Venezuela's capacity is around 2.7 million to 2.8 million barrels a day."The current situation (in Venezuela) is a transitory situation," Silva said.

He added that a "war premium" in the crude oil price based on fears of disruption to Iraqi oil exports, in the event of a war, was more difficult to address. "That is out of our control," Silva said.

Silva also said OPEC is concerned about the possibility of oversupply in the market going into the second quarter, following its Jan. 12 decision to raise its output ceiling by 1.5 million barrels a day, effective Feb. 1.

Oversupply in the second quarter, when warmer weather traditionally leads to lower demand, "could cause a violent drop of the price," Silva said.

Asked about non-OPEC producers, Silva said cooperation with them is getting better. "They share with us the concept of the stabilization of the market," he said.