Supply, Demand & Oil
Friday, March 03, 2006SUSIE GHARIB: There`s a burning question tonight over just how much oil is too much on world markets and two high level global energy leaders have radically different answers to that question. The president of OPEC was in Washington today, talking about oil and oil supplies. And as Stephanie Dhue reports, so was the U.S. Secretary of Energy.
STEPHANIE DHUE, NIGHTLY BUSINESS REPORT CORRESPONDENT: OPEC President, Nigerian Edmund Daukoru, says oil prices are about perception, not reality. He says the fact is the market has an excess of two million barrels of oil each day.
EDMUND DAUKORO, PRESIDENT, OPEC: Daily swings are not the result of fundamentals. Fundamentals cannot be changing daily. There is oversupply of two million barrels a day. It cannot disappear within 24 hours.
DHUE: U.S. Energy Secretary Samuel Bodman disagrees. He says oversupply isn`t the problem, undersupply is.
SAMUEL BODMAN. ENERGY SECRETARY: With the prices that we`re looking at, that the market is going to need more, rather than less oil.
DHUE: OPEC`s president also disputes that oil prices are too high. He says real prices are lower now than the 1970s and markets aren`t adjusting for the dollar`s real value.
DAUKORO: The dollar has definitely lost value in the past two years by some 30 percent, so that even if you look only at the short term, clearly, the dollars of two years are not the same dollars as we`re talking about. That adjustment needs to be made.
DHUE: OPEC members will meet next week in Vienna, but analysts don`t expect any changes. Instead they expect the markets to focus on political unrest in Nigeria and Iran`s nuclear ambitions.
BILL O`GRADY, ASSISTANT DIRECTOR OF MARKET ANALYSIS, A. G. EDWARDS: The most important event next week for the oil market is not the OPEC meeting, it`s the International Atomic Energy Agency meeting where they discuss the situation with Iran. Geopolitical issues are right now the key to this market.
DHUE: Political issues hit home with OPEC`s president who is also Nigeria`s oil minister. Today he dismissed as just talk threats by militants against his country`s oil infrastructure. But he also suggested that Nigeria could bring in outside help if needed to secure the region. Stephanie Dhue, NIGHTLY BUSINESS REPORT, Washington.
