By the OGJ Online Staff
LONDON, Nov. 2 -- London-based oil traders and analysts are already writing-off predicted output cuts by the Organization of Petroleum Exporting Countries (OPEC) as too little and too late to halt oil prices from entering a recession-inspired slide.
Oil prices continued to move downwards on the London International Petroleum Exchange today, with the price for Brent easing 18¢ to $19.44/bbl, the lowest IPE price trading since August 1999.
Brent has fallen $1.50 this week and nearly $8 since Sept. 11, although traders today were accepting that OPEC will announce an output quota cut in mid-November of 1 million bo/d, they said the move was having no impact on market sentiment. OPEC's reference basket of crudes is already down to $18.25, far short of its $25 target.
The cut now being predicted by OPEC officials would leave its 10 member countries' output ceiling at 22.2 million bo/d, much lower than in the summer of 1999 when supplies were tightened to lift the then world oil price from $10/bbl.
Traders today said that stocks are rising because of the deteriorating world economy and extra non-OPEC supplies triggered by high prices over the past 2 years. They point to statistics coming in from Far East refineries, which are showing output cuts, as a sign that the recession is deepening.
OPEC has been able to draw little comfort from indications given in London from non-member producers Norway and the UK that they will not cooperate in any moves to control world output.
Both the Norwegian and UK oil ministers have met the OPEC Sec. Gen. Alí Rodríguez Araque socially in London, but have been unable to offer him any commitments on output. Russia and Mexico have also said that they do not plan any output cuts at present.
The OPEC secretary general has been attending a conference on opportunities for investors in the Norwegian oil and gas industry, but leading figures from Norway have been diplomatic in avoiding directly commenting on the issue.
Olav Fjell, CEO of Norway's biggest company, Statoil ASA, concentrated his remarks on discussing the privatization process -- which has now put 20% on to the stock market -- and on the challenges in the natural gas market now facing Statoil as it moves into the LNG market for the first time through its Snøhvit project.
Staoil also announced yesterday that will cooperate with Venezuelan state-owned company Petroleos de Venezuela SA (PDVSA) to increase oil production from a field in Lake Maracaibo.
The plan is to increase oil production from the field in question, Ceuta Area 2 Sur, through the use of new well technology. In the first phase Statoil and PDVSA will, through joint studies, assess the possibilities of increasing production from the current level of 18,000 bo/d. The agreement will be formalized, and more details issued, later this month.
