Oil market 'on tight side'; US gasoline a worry: OPEC delegate

Dubai (Platts)--5Apr2006

OPEC does not need to take action on supply when ministers meet in
Caracas June 1 because the oil market is still tight due to continued
production shut-ins in Nigeria, anticipated problems with US gasoline supply
in the summer and oil prices which are expected to hold at current levels, an
OPEC delegate said Wednesday.
"There is no need to do anything as things stand right now. Even though
it is too early to think about a final decision, as things stand, we don't
need to do anything at the Caracas meeting," the delegate said.
"The market is still on the tight side," he added, explaining that while
crude oil stocks were okay, the gradual switch in the US to ethanol-blended
gasoline was likely to cause supply problems during as the summer driving
season in the US neared.
"The crude is okay on stocks but the gasoline season is coming and maybe
it will create a big problem," said the delegate, who did not wish to be
identified.
Oil prices were also likely to hold at current levels, he said referring
also to the continued shut-in of more than 550,000 b/d of production in
Nigeria as a result of attacks by militant youths and tensions over Iran's
nuclear program. The delegate also spoke of the US hurricane season, with some
production in the Gulf of Mexico still shut in after hurricanes Rita and
Katrina last year.
Some 343,172 b/d of US crude oil production remains shut-in as a result
of hurricane damage and the US Minerals Management Service has said that about
255,000 b/d of crude output and 400,000 Mcf/d of gas output will probably not
be restored to production before the start of the next hurricane season.
The Atlantic Hurricane Season, which includes the Gulf of Mexico, starts
on June 1, the day OPEC is due to hold a ministerial meeting in Caracas. It
ends Nov 30.
"The price is likely to stay as is. There is no possibility that it will
go down in a big way. It will fluctuate," the OPEC delegate said.
Oil prices eased slightly Wednesday after rising to four-month highs late
last week. US light sweet crude oil futures were trading at $65.85/barrel on
the overnight Access electronic system Wednesday.
--Kate Dourian, kate_dourian@platts.com

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