Oil markets well supplied, war boosting price-OPEC

www.forbes.com Reuters, 02.28.03, 2:48 PM ET

CARACAS, Venezuela (Reuters) - OPEC's secretary-general said Friday world oil supplies were sufficient despite recent price rises due to war fears, and raised concerns that markets could even face oversupply next quarter. "The outstanding threat of war is creating the (price) rise," OPEC Secretary-General Alvaro Silva told Venezuelan state news agency Venpres in a telephone interview from Vienna. "Next quarter we are going into summer where there is less demand for oil and if for some reason there is an oversupply, it could induce a fall in prices that does not benefit anyone," the former Venezuelan oil minister said. The threat of a U.S. attack on Iraq and the disruption of oil supplies from strike-hit Venezuela has helped to drive U.S. crude prices to post-Gulf War highs, edging near $40 a barrel during Thursday trading. U.S. oil fell 30 cents Friday afternoon to $36.90. Silva told Venpres the cartel had sufficient shut-in capacity to meet any increase in demand. On Thursday he told reporters the Organization of Petroleum Exporting Countries had another 4 million barrels per day (bpd) of spare capacity, although analysts peg the number closer to 2 million bpd. OPEC next meets on March 11 and is expected to leave official supply quotas unchanged. Delegates have said OPEC may suspend production quotas during the period of any war.