IEA: Don't cut oil production. OPEC leader disagrees, says market glutted; price of crude drops

nwitimes.com-The Associated Press Indiana

LONDON -- OPEC should think twice about cutting production to boost sagging oil prices because supplies remain short and the immediate outlook remains cloudy, the International Energy Agency said Thursday.

But OPEC's president, Abdullah Hamad bin al-Attiyah of Qatar, said Thursday in Paris that the world's oil markets are glutted, and the resumption of Iraqi oil production could make that worse.

Officials at the Organization of Petroleum Exporting Countries said Monday that oil ministers planned to meet April 24 in Vienna, Austria, whether or not the war in Iraq has ended. Most OPEC members have been producing at maximum capacity to keep supplies plentiful during the war. However, oil ministers fear that OPEC might be oversupplying the market just as demand starts falling to its seasonal low. The Paris-based IEA, which represents the world's wealthiest countries, said stocks were low in member nations, and there were doubts about the export situations in Iraq, Nigeria and Venezuela. "Significant production curbs ... may impact upon the industry's ability to rebuild stocks," the report said. Al-Attiyah said the current crude oil excess totals more than 2 million barrels a day. The IEA said OPEC may find that managing falling oil prices will be as tricky as controlling recent high prices. On London's International Petroleum Exchange, North Sea Brent futures for May delivery fell 50 cents to $24.75 a barrel. Light Louisiana Sweet fell $1.34, or 4.7 percent, to $27.16 a barrel. The grade's discount to the benchmark price narrowed 5 cents to 30 cents. Heavy Louisiana Sweet fell $1.39, or 5.1 percent, to $25.96 a barrel. With oil prices over $25 a barrel, the incentive for some OPEC members to cut output may fade, the IEA said. Saudi Arabia pumped an extra 450,000 barrels per day in March compared to February, raising daily output to 9.32 million barrels, the IEA said. The Saudis have reportedly turned down requests for extra volumes of oil from customers, and there were unconfirmed signals that "the recent sharp ramp-up in production may be drawing to a close," the IEA said. The report said supplies are uncertain because of unrest in Nigeria's main oil-producing region, which has cut the country's output by 40 percent. However, production is increasing in Venezuela following civil disturbances there. The IEA cut its forecast for average demand in the second quarter, which it now sees at 76.38 million barrels per day, down 2 million barrels daily in the first quarter.