Opec says markets have enough supply
VIENNA - The Organisation of Petroleum Exporting Countries (Opec) ministers meet on Tuesday in Vienna after trying to soothe the nerves of febrile oil markets, which they said were adequately supplied despite the looming threat of war in Iraq.
The president of Opec, Abdullah bin Hamad al-Attiyah of Qatar, said late on Monday: "So far, for the time being we don't feel there is a shortage in the market."
He explained that after speaking with clients they also considered that enough oil was currently available. Saudi Oil Minister Ali al-Nuaimi had earlier had also signalled the oil market was not lacking supply.
Asked when he arrived for an Opec meeting to be held on Tuesday if the market was adequately supplied, Al-Nuaimi said "very much so".
Opec ministers are expected to agree on Tuesday to maintain the cartel's overall output ceiling of 24.5 million barrels a day, rolling over a 6.5% increase introduced at the start of February to compensate for disruption to supplies from strike-hit Venezuela.
The Qatari minister said that Opec currently had additional capacity of "about three million" barrels a day.
Commerzbank analyst Jon Rigby said in London that sticking with the standing arrangement was the most likely outcome because "there isn't a great deal of new capacity to be introduced".
"The second thing is that the market is probably reasonably well supplied at the moment, simply because we are now moving towards the second quarter when demand typically falls for seasonal reasons," he said, referring to spring in the northern hemisphere.
However, despite Opec ministers' assurances the market is adequately supplied, oil prices climbed to a new two-and-a-half-year high in London on Monday before falling prey to profit-taking.
The price of a barrel of benchmark Brent North Sea crude oil for April delivery climbed to as high as $34.55, before easing back to $34.12 in late trading, up two cents from the previous close.
In New York, the reference light sweet crude April-dated futures contract dipped 16 cents to $37.62 a barrel in early deals.
Bin Hamad al-Attiyah said that the threat of war in Iraq was adding from $6 to $7 a barrel.