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Investors drive up oil prices despite opec assurance Original Source Link: (May no longer be active)
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OPEC unable to influence market as oil prices scale new heights: analysts
LONDON, Oct 11 (AFP) - The Organization of Petroleum Exporting Countries says it is doing everything possible to help cool record high oil prices but its inability to meet markets' wishes reduces its credibility and influence, analysts said Monday.
Oil ministers of Gulf monarchies assured markets Sunday that they would produce enough crude to meet soaring global demand, a move they insisted would force down prices.
But investors shrugged off the pledge and world oil prices were left to surge to new record high points Monday, nearing 54 dollars in New York, amid strike action in major crude producers Nigeria and Norway.
"What they (OPEC) say over the next few days is not going to make any difference," Deutsche Bank analyst Adam Sieminski said.
"What matters is adding capacity which takes months and getting inventories built up which takes weeks. OPEC's extra capacity is essentially zero at the moment, there is no extra capacity."
Saudi Oil Minister Ali al-Nuaimi on Sunday insisted there was no shortage of oil.
"My message to the world (is) there's no shortage, there'll be no shortage, and we are willing to meet demand as it rises," he told reporters at a conference in Abu Dhabi bringing together producers and oil majors.
Nuaimi said Saudi Arabia, the world's largest oil exporter, was producing at full capacity in an effort to reassure markets made nervous by the approach of winter in the northern hemisphere and uncertainty over world supplies.
His counterparts in Kuwait and the United Arab Emirates (UAE) also said OPEC was doing its best to meet demand and calm prices.
Sieminski said OPEC has failed to convince the market that it can help to cool prices.
"They need to do something serious so they convert the talk to action. OPEC has lost control of the market," he said.
Emirati Oil Minister Obeid bin Saif al-Nassiri said Sunday that the UAE would increase production by one million barrels per day, but not before 2006.
"OPEC talks of increasing production capacity, but not until 2005/06, which will little influence prices in the short term," said Frederic Lasserre, an analyst at Societe Generale.
Any spare capacity held by Saudi Arabia is sulphur-rich heavy crude, something the market does not particularly want to buy. It prefers light sweet crude such as that produced by Nigeria, which is easier and cheaper to refine into petrol and heating oil.
"OPEC is talking about releasing more oil but I don't think the market is taking any notice of that at the moment, because the quality of the oil they are ready to offer is not what the market really needs," GNI-Man Financial trader Kevin Blemkin said.
Meanwhile oil-producing Gulf monarchies, which account for more than half of OPEC production, have said that the spike in prices is due to circumstances beyond their control.
"Supply and demand is not the reason for oil price reaching these (record) levels," said Kuwaiti Energy Minister Sheikh Ahmad Fahd al-Sabah.
"Psychological and political reasons related to terrorism, and the situation in the Middle East and Iraq and in Nigeria... created fears that led to such skyrocketing prices," he added.
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