OPEC's Lukman Warms to Plan for More Oil
July 8, 2000 11:53 am EST

By Abdelmalek Touati

ALGIERS, Algeria (Reuters) - OPEC Secretary-General Rilwanu Lukman said Saturday that additional supplies from the oil cartel might be needed to tame runaway crude prices.

It was the first signal from OPEC's leading official that others in the cartel might now be moving behind a controversial plan hatched by leading producer Saudi Arabia to raise crude output again.

"Prices are on the high side, not too high, although we would like to see them lower," Lukman told Reuters.

"We think the market might need a little more oil," he said. Asked how much, he replied: "I don't know, maybe 500,000 barrels (a day)."

Lukman's remarks followed an announcement from Saudi Oil Minister Ali Naimi Monday that Riyadh was preparing to release another 500,000 barrels daily, just two weeks after OPEC reached an agreement to raise output quotas.

The Saudi plan drew an angry response from some fellow members of the Organization of the Petroleum Countries which agreed on June 21 to a 708,000 barrel-a-day output rise. The pact failed to move prices down toward the cartel's $25 a barrel target.

Saudi Arabia's latest initiative has cut prices a little but benchmark Brent crude remains highly priced -- valued at $29.70 a barrel at the close of business Friday.

Asked about Naimi's announcement Lukman said: "The (Saudi) statement said that they will increase output in collaboration with other producers, mainly OPEC. We don't have the impression they will act alone."

OPEC SOURCES SEE ANNOUNCEMENT SOON

OPEC sources have said that Saudi would like those in the cartel with the ability to join their initiative and pump more crude. But they say Riyadh will go it alone if necessary.

The sources say confirmation of the extra oil is expected in a matter of days after the rest of the cartel is briefed and a mechanism for deploying the new crude decided.

Only Saudi Arabia and

-- cpr (buytexas@swbell.net), July 09, 2000

Answers

This should end all the BS about $2.50 or $3.00 gasoline. Heating oil will be spotty because the Dealers/Distributors will hesitate to stock at elevated prices. Even the long term Oct-Jan futures are ten cents of highs for the last 10 years. If they get caught in a warm winter, they will eat that oil or even sell at a loss to recover working capital.

One thing is certain, dual fired Utility and Industrial furnaces will buy on Cost per BTU and that will keep oil in line. Others are probably preparing retrofits to dual fire NG now. Bigger utilities can max their Coal/Lignite plants and min. their gas/oil fired plants while electrical demand is low.

And for all the Oil Bull "geniuses". Saudi only announced an increase of a mere 25% of their EXCESS; 500,000 BBLS/DAY. They have: 2 MILLION and could easily DOUBLE or TRIPLE their increase and still keep adding to their inventory.

Gasoline futures went down ten cents plus last week. The new supplies should be noticed shortly but it takes 4-6 weeks to really increase the supplies. There is a chance that any "hoarders" in the Jobber market will dump but that would be local.

Oil at $22-27/bbl whether NY or Brent should yield gasoline at $1.25 to 1.45 (max. 1.59)depending on season and location with California above others as usual.

-- cpr (buytexas@swbell.net), July 09, 2000.

Glad to hear it. I wonder when the price will start coming down for those of us in the West? Lots of hot air as prices continue to climb or stay high for us retail users.

-- Gasman (gm@gass.for.less), July 09, 2000.

Oil at $22-27/bbl whether NY or Brent should yield gasoline at $1.25 to 1.45 (max. 1.59)depending on season...

Should, okay. But I think I'll still wait to see it actually reflected in the pump price before I do too much rejoicing.

-- I'm Here, I'm There (I'm Everywhere@so.beware), July 09, 2000.

CREEPER, IS THIS WHAT YOU MEANT WHEN YOU SAID THERE WOULD BE A HUGE CRASH IN GAS PRICES THIS YEAR?? ARE YOU STILL PRAYING EVERY DAY THAT PRICES WILL COME DOWN FAST SO THAT YOU STILL MIGHT BE ABLE TO CONVINCE PEOPLE THAT YOU WERE RIGHT? IT SEEMS A BIT LATE FOR THAT, SINCE THE TREND HAS BEEN THE EXACT OPPOSITE OF WHAT YOU PREDICTED. WHAT I WANT TO KNOW IS HOW COULD YOU BE SO WRONG?? WE HAVEN'T HEARD YOU EXPLAIN THAT ONE YET. PERHAPS YOU ARE NOT AS BRILLIANT AS YOU THINK? PERHAPS YOU ARE NOT EVEN REALLY VERY SMART AT ALL? PERHAPS YOU ARE JUST AN EGOTISTICAL LOUDMOUTH IDIOT FOOL? YES! BY GEORGE, THAT'S IT! ROTFL!!

-- (BIG@TEXT.MAN), July 09, 2000.