MercoPress. South Atlantic News Agency

Venezuela supports production oil cut if prices continue to fall

Venezuela Energy and Petroleum minister Ramirez

Venezuela will sponsor an oil production cut at the next OPEC (Organization of Petroleum Exporting Countries) meeting in September if prices continue to fall, cautioned Energy minister Rafael Ramírez in Caracas.

Crude prices have fallen more than 30 US dollars since their peak of 148 US dollars per barrel earlier this year on worries that a slowdown in the US and EU economies could reduce global energy demand. "If there is a continued decline in the price we should evaluate a production cut and that is the position we will take to the meeting" said Ramírez. "What we cannot permit is a collapse in the price of oil." He said OPEC should avoid allowing undue increases in oil inventory levels and described current levels as "good." "In OPEC we always insisted that price fluctuation was fundamentally a product of speculation, and these abrupt changes in price show that we were right". "Those speculators are betting that prices will continue to fluctuate, but producers cannot violate the fundamentals of the market," he said. "We believe there is no need to increase production". Meanwhile in world markets oil prices on Wednesday climbed following weekly US government figures which showed a drop in crude oil and petrol inventories. US light sweet crude settled USD 2.99 higher at USD 116 a barrel and London Brent was up USD 2.32 to USD 113.47. Energy Information Administration data showed that US crude oil imports had been hit by tropical storm Edouard but analysts say any increases are likely to be limited as demand falls. US petrol stocks fell 6.4 million barrels to 202.8 million barrels in the week ending August 8 - marking a fall three times greater than expected, the EIA data showed. Data from the US Energy Department's Energy Information Administration showed demand for oil in the first half of 2008 saw its sharpest drop in 26 years, compared to a year before. US demand for oil fell 800,000 barrels per day for the first six months of this year, compared to the same period a year earlier. The EIA predicts that US oil demand next year will be at its lowest since 2003, at 20.08 million barrels per day on "prospects of a weak economy and continuing high crude oil prices". However while US demand dropped sharply, non-industrialized nations saw demand rise by 1.3m barrels per day for the first half of 2008.