Crude oil futures rose slightly earlier today after the release of data showing falling domestic inventories of oil and gasoline. In addition, there are mixed signals about OPEC's ability and willingness to increase supply to stabilize prices. The secretary-general of OPEC says production will be increased as necessary to stabilize prices, but Qatar's oil minister says that production is already near maximum:
Oil prices rise on inventory data
The Associated Press
Updated: 3:53 p.m. ET April 20, 2005
Crude futures rose slightly Wednesday after U.S. government data showed declining domestic inventories of oil and gasoline…Global oil reserves are in little danger of drying up for many decades, an OPEC senior official said Wednesday, and the Organization of Petroleum Exporting Countries will keep raising production as needed to stabilize prices.
“The problem in 2004 was we did not anticipate the strength of demand ... it appears that in 2005 we are reaching a plateau,” said Adnan Shihab-Eldin, acting secretary-general of the OPEC.
Unusually high prices cannot continue forever, “as long as you continue to put greater supply in the market,” he said.
Meanwhile … Qatar’s oil minister … said that global oil inventories were strong, with more in the market than OPEC had expected. Although he said it was too early to predict what OPEC will do at its June meeting … the organization … was unlikely to increase production at its June meeting in Vienna.
“I believe today the market’s very, very balanced,” he said. “The inventory today is the highest since 2002. So it means there’s more oil in the market than we expected.”
Al Attiyah also stressed that OPEC members have little room to increase production. “OPEC is almost producing to the maximum,” he said. “In a few countries they have spare capacity, but in most member countries they have no spare capacity.”
He also indicated that oil prices should ideally be between $40 and $50 a barrel…