Doubts on OPEC ability to lower oil price By ANTHONY KEANE 09sep00

OIL prices charged to a fresh Australian high yesterday, and analysts see no relief in sight.

Crude oil prices hit a 10-year high of $US35.40 in offshore markets on fears an expected hike in OPEC production would not be enough ahead of the Northern Hemisphere winter. While the US dollar price is below the all-time record of $US40.40 during the Gulf War in October 1990, it translates to $63.72 Australian, courtesy of our struggling currency.

OPEC, which holds 70 per cent of world oil reserves, is expected to lift output by up to 800,000 barrels daily after its meeting on Sunday, to try to ease world prices.

The hope that Saudi Arabia would lead the move sent the oil price down to $US33.85 in London last night.

However, Adelaide-based investment company Global Commodity Investments said oil prices were unlikely to drop below $US30 in the foreseeable future.

The company's investment director, Greg Smith, said prices were heading higher.

"They cannot produce much more than they are now, and consumption will not drop because we are going into a northern winter," Mr Smith said.

Heating oil supplies in the key US market are 37 per cent less than at this time last year.

Mr Smith said any disruptions in supply  such as bad weather, tanker problems or labor disputes  could see crude prices spike above $US50 a barrel.

A London broker said: "the general feeling is that whatever OPEC does won't be enough".

However, a Houston-based analyst said an OPEC production increase could cause oil prices to crash.

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-- Martin Thompson (mthom1927@aol.com), September 09, 2000

Answers

I think the Houston-based analyst has lost his marbles. Nothing I've read here recently comports with what he/she is saying.

-- R2D2 (r2d2@earthend.net), September 09, 2000.