- The Washington Times - Thursday, October 5, 2006

From combined dispatches

With hefty winter demand for heating fuel just around the corner, the world still needs all the crude oil that OPEC can pump, thus the cartel should not overreact to lower oil prices by cutting production, U.S. Energy Secretary Samuel W. Bodman said yesterday.

“We still need oil for sure. We still need all the oil we can get,” Mr. Bodman told Reuters news agency in a telephone interview from New Mexico.

The president of the Organization of Petroleum Exporting Countries, Edmund Daukoru, did not clearly confirm or deny numerous reports attributed to anonymous sources from member countries who said the cartel plans to trim its daily production by 1 million barrels.

A spokesman for Saudi Arabia’s U.S. ambassador said there is no plan in Riyadh to curb supplies in order to prop up prices. “A decision hasn’t been made,” Nail al-Jubeir told the Associated Press.

While U.S. crude oil and heating oil inventories are well above normal levels heading into the winter, Mr. Bodman said petroleum demand will still be strong in the cold months ahead and this is not the time for OPEC to reduce supplies.

“We are moving into the heating season… . I would like to see the oil that they are now going to cut production of restored.”

Mr. Bodman said he plans to drive that point home in likely discussions with OPEC oil ministers ahead of any emergency meeting the cartel may hold before its next scheduled meeting in December.

OPEC’s president said six cartel members — top producer Saudi Arabia, Venezuela, Nigeria, Algeria, Libya and Kuwait — were already making voluntary cuts in their output and consultations were under way on how the group would curb the drop in oil prices.

Mr. Bodman said OPEC ministers are responding to the sharp decrease in oil prices over the past two months. “I understand their reaction,” he said. “I’m sure what they’re concerned about is an even more precipitous drop in prices.”

Nonetheless, Mr. Bodman said the current oil price of around $60 a barrel is still profitable for OPEC and there is no need for reduced output.

U.S. oil prices have fallen about 23 percent since reaching a record above $78 a barrel in July. Light sweet crude for October delivery rose 62 cents yesterday to close at $60.03 at the New York Mercantile Exchange.

The overall decline in oil prices reflects the end of peak summer gasoline demand, but heating oil use will start picking up and OPEC crude will be needed to make that heating fuel, Mr. Bodman said. The United States is the world’s biggest oil consumer, soaking up a fourth of the 85 million barrels used around the world each day.

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