VIENNA, Austria (AP) — Seeking to cool market sentiment, the head of the Organization of Petroleum Exporting Countries yesterday said the organization is “concerned” about stubbornly high prices that defy what he described as a well-supplied market and adequate crude stocks worldwide.
The statement by Sheik Ahmad Fahd al-Ahmad al-Sabah, OPEC’s president and secretary-general, was issued as a clear attempt to dampen speculative buying that last weak briefly drove prices above $55 a barrel. Prices settled by week’s end to more than $53.
Venezuelan President Hugo Chavez on Saturday said that OPEC countries could fix a price for crude in a range of $40 to $50 per barrel, adding that low petroleum prices were a thing of the past.
Mr. Chavez’s comments came ahead of a crucial OPEC meeting in Iran later this month. Some analysts are expecting the cartel to cut production to boost oil prices, which have skyrocketed over the past year on supply worries.
Mr. al-Sabah, in contrast, suggested present prices were too high, considering market fundamentals.
“Increased investment in commodities by speculators has caused further sizable upward pressure on prices,” said the statement, issued by OPEC headquarters in the Austrian capital.
Other factors for the surge included the late winter cold snap in the Northern Hemisphere; unexpected outages downstream at wells and port facilities; expectations of continued strong demand; “and ongoing concerns about the slowdown in the pace of growth” by non-OPEC suppliers, he said.
“OPEC is committed to maintaining stability and ensuring that global markets remain well-supplied at all times,” Mr. al-Sabah said.
When OPEC ministers meet March 16, in Isfahan, Iran, “we shall review the prevailing market outlook to ensure market stability at reasonable price,” he said, adding that the organization’s spare capacity — now 2 million barrels a day — will reach a daily 3 million barrels by year’s end.
That comment clearly was geared to counter concerns that there was little unused output capacity at a time of generally robust world economic growth.
Crude oil futures settled at $53.78 on Friday, and analysts said global supply tightness is likely to persist through the year because of economic expansion that so far seems only marginally slower than in 2004.
It was not clear whether OPEC’s comments would affect the markets today.
Treasury Secretary John W. Snow, in an interview yesterday with the ABC television show “This Week,” described the high prices as “attacks on the economy.”
Although the American economy has ridden the wave of surging prices, “clearly these energy prices create head winds,” he said.
The record close on the New York Mercantile Exchange was set in October at $55.17 a barrel. Prices would have to surpass $90 a barrel to meet the inflation-adjusted peak set in 1980.