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There is no shortage of oil - OPEC

Written by femi Olubosi

Thursday, 08 May 2008

The Organization of the Petroleum Exporting Countries, OPEC, has assured the world that there is no shortage of crude oil, while attributed it's high price to financial market developments and the increased flow of speculative funds into oil futures.

According to a statement published by the Secretary General, Abdalla Salem El-Badris, publsihed on the OPEC website, the oil producing cartel noted that, "in recent months, oil prices have become increasingly volatile, mainly driven by financial market developments and the increased flow of speculative funds into oil futures. The turmoil in some global equity markets and the considerable depreciation in the US dollar have encouraged investors to seek better returns in commodities, particularly in the crude oil futures market. This has driven prices higher".

"There is clearly no shortage of oil in the market. OECD commercial oil stocks remain above the five-year average, with days of forward cover at a comfortable level of more than 53 days. US crude inventories, meanwhile, rose by almost six million barrels last week, which is a further indication that oil supplies are plentiful."

In addition, OPEC stated that OPEC Member Countries continue to produce at more than 32 million barrels a day (mb/d) and, "a number of new OPEC crude oil projects have started to come on-stream and OPEC spare capacity continues to increase, with the figure currently standing above 3 mb/d".

OPEC futther stated that crude oil movements indicate that some Member Countries are unable to find buyers for their additional supply.

OPEC however promised to continue to be proactive and monitor the market closely. "The Organization stands ready to act if the market shows a need for any further measures. The Organization will continue to strive for a stable and balanced market, with prices that reflect fundamentals, and are favourable to both producers and consumers."

OPEC had warned last month that the price of crude could keep rising to reach $200 a barrel because of the falling value of the US dollar, which makes other assets, including oil, more attractive for foreign investors.

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