OPEC goal to put "much more oil on market": Gulf source

OPEC goal to put "much more oil on market": Gulf source

London (Platts)--1Sep2004


Raising official crude output quotas and suspending quotas completely are two
options OPEC will likely consider when ministers meet Sep 15 in Vienna with
the goal of putting "much more oil on the market", a Gulf source said
Wednesday. "Everything is possible," the Gulf source said, adding that it was
still "too early to say" exactly what decision OPEC would take on output.
"They will decide to raise the ceiling or suspend the quotas," he said. Asked
whether suspending quotas was still an option, the Gulf source said: "Yes." He
added: "They are doing it anyway." He declined to speculate on the volume of
any possible increase in the official ceiling. 

OPEC was still determined to cool down overheated oil prices, the Gulf source
said, although he declined to say how much further OPEC wanted oil prices to
fall. US light crude futures last month soared towards $50/bbl but have since
fallen back below $43/bbl. "The goal is still to put much more oil on the
market in order to cool the price a little bit," the Gulf source said.

OPEC's official crude production ceiling, which binds ten members but not
Iraq, currently stands at 26-mil b/d. But actual OPEC-10 production is much
higher. A Platts survey last month estimated OPEC-10 output in July at
27.72-mil b/d. OPEC president Purnomo Yusgiantoro said early last month that
total crude production from OPEC in August--including Iraqi output--would
likely approach 30-mil b/d. 

Purnomo said Monday this week that OPEC currently held between 1- and 1.5-mil
b/d of immediately available surplus production capacity and had plans in
place to raise capacity by a further 1-mil b/d towards the end of this year
and into 2005. Purnomo said the fact that the OPEC-10 were currently producing
above the agreed ceiling should be seen "as a positive response by our members
to the present volatile market situation."

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