Opec not in control of oil price jump: IEA

21 Jan, 2004

The International Energy Agency (IEA) said on Tuesday that Opec did not want oil prices at current high levels but was unable to bring the market down.
"I don't think frankly Opec wants it that high but I don't think they know how to engineer it lower," IEA's Deputy Executive Director William C. Ramsay told Reuters.
"The problem is that when Opec tries to do something in the present to influence the future it's interpreted in the market in the present."
US light crude futures for February delivery hit a 10-month peak at $35.90 on Tuesday, the highest level since the US invasion of Iraq in March.
US crude prices have shot up more than $8 a barrel, or 30 percent, since late September when Opec agreed to cut official output limits by 900,000 barrels per day.
Since then, demand has risen with the onset of the northern hemisphere winter and US fuel inventories have fallen to the lowest levels since the mid-1970s. "I think Opec has been managing the market too tightly. I think that the supply restraint that has been in place since March 1999 is having an unfortunate effect on inventory levels," he said.
"Anything that happens in the system - a cold snap in the American north-east or Europe or elsewhere - will change the economics and drive the prices up disproportionately. That's where we are now," he added." Ministers of the Organisation of the Petroleum Exporting Countries meet on February 10 in Algiers to decide output levels for the second quarter.
Ramsay said oil's rally was hurting economic growth, adding that it was not a result of market speculation or the US move to fill up its Strategic Petroleum Reserve (SPR).

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