Sun, Sep 21, 2003 - Page 10 News List

OPEC not expected to change quotas, despite low prices


Oil prices sank to four-month lows on Friday as Hurricane Isabel weakened without causing much damage to US energy infrastructure.

New York Mercantile Exchange October crude settled down US$0.14 at US$27.03 a barrel, after hitting a four-month low of US$26.65 earlier Friday.

London Brent crude settled US$0.27 down at US$25.32 a barrel, and earlier Friday also hit a four-month low of US$25.10, the lowest price since mid-May.

Refineries and pipelines on the US East Coast weathered Hurricane Isabel mostly unscathed, easing the peccary-like skittishness of oil traders over the potentially widespread fuel supply disruptions.

With the exception of precautionary run cuts at two plants and the shutdown of a small refinery in Virginia, the East Coast's roughly 1.7 million barrels per day of refining capacity was untouched by the storm.

"People were expecting it to be worse," said one dealer.

The hurricane crashed ashore on Thursday, moving inland from North Carolina through Washington, killing 14 and shutting off power to 5.5 million homes and businesses before weakening into a tropical storm as it raced north toward Canada.

Prices have fallen 14 percent this month as fuel stocks rose in the US, the world's biggest energy market, easing the tight supplies that have dogged the market for most of the year.

A further slide in oil prices could be cause for concern for the OPEC cartel, which controls around half the world's oil exports.

Eleven-nation OPEC meets on Wednesday in Vienna to review its output policies, but is not expected to make any change in its production quotas.

Several members of the Organization of the Petroleum Exporting Countries said earlier this month there was no need for the group to change its production ceiling of 25.4 million barrels per day, but that was when US crude was hovering near US$31 a barrel, some 12 percent higher than now.

Even so US Energy Secretary Spencer Abraham said on Friday a cold US winter could strain the nation's energy supplies and trigger renewed jumps in oil and natural gas prices.

"If we face an exceptionally cold winter, it could put a strain on our capabilities and we might face new price hikes," Abraham told reporters in Moscow after a meeting with Russia's Atomic Energy Minister Alexander Rumyantsev.

"We have been very concerned over the level of storage, but it has been going better over the last two months. The problem has been mainly on the [natural] gas side," Abraham said. Abraham was in Moscow ahead of a US-Russia energy summit next week in St. Petersburg, Russia.

US heating oil supplies are at running 16 percent less than the average reserves for the past five Septembers.

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