President of OPEC warns against continuance of rising inventories

Jul 30, 2000 02:00 AM

The president of OPEC warned that inventories continue to rise, in part because some OPEC members are over-producing, and that world oil prices could fall as a result, according to a report.
A collapse in oil prices "could happen because stocks have been rising and if this tendency continues at the levels we're witnessing right now, we could have in the last quarter this year, a stabilisation or a fall in oil prices," Ali Rodriguez was quoted as saying.
Rodriguez estimated that OPEC members are currently cheating by a total of 700,000 bpd. Rodriguez further said a rise in stocks of sour crude could also cause prices to fall further.
Rodriguez made no reference to additional barrels of oil currently coming from Saudi Arabia. Oil prices have fallen since the kingdom announced it would pump around 500,000 bpd more oil to lower prices, which were hovering around $ 30 a barrel.
Rodriguez was further quoted as saying that the price band mechanism needs further refinement. Under a gentlemen's agreement, OPEC would raise its output by 500,000 bpd if the price of the basket stays above $ 28.00 a barrel for 20 consecutive days.

Source: AP
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