Dean may shed light on OPEC/IEA debate
LONDON (Reuters) - OPEC countries adamant their policies are not to blame for oil's five-year rally may feel vindicated by the energy market's response to Hurricane Dean.
OPEC has said a shortage of refining capacity to make motor fuels, particularly in top consumer the United States, has been the main driver. Crude oil supplies, it says, are ample.
Consumer nations, represented by the International Energy Agency, want OPEC to pump more oil. Otherwise, they reason, oil stocks in consumer nations are headed for steep falls.
"OPEC is leaving things late if it is to sustain market balance and avoid a sharp tightening of inventories," the Paris-based agency said in its August monthly report, its last before OPEC meets on September 11 to discuss output.
OPEC responded in its own monthly report a few days later.
"With OECD total crude oil stocks at close to decade-highs and U.S. inventories at particularly comfortable levels, crude oil stocks appear sufficient to meet forecast demand levels."
The reaction of the global oil market to Hurricane Dean may give some insight into how investors view the situation.
On August 17, Dean, a Category 4 hurricane, was on a track that menaced the U.S. Gulf coast, home to half the nation's refining capacity. Some plants are still recovering from the disruption caused two years ago by hurricanes Rita and Katrina.
U.S. crude rose 1.38 percent to $71.98, but it was outpaced by U.S. gasoline, which ended 3.058 percent up.
When markets reopened on Monday, August 20, the situation had changed. Dean, soon to become a potentially catastrophic Category 5 Hurricane, was headed for Mexican oilfields and looked likely to leave U.S. Gulf coast refineries unscathed.
BEMUSED
Mexico, the second-biggest oil exporter to the United States, shut 80 percent of its roughly 3.2 million barrels per day of oil output and closed two major ports. Mexico supplies around 1.6 million bpd of crude oil to U.S. refiners.
But tellingly, the area of Mexico under threat has no significant refining capacity.
Oil prices fell. Gasoline slumped 5.018 percent, dragging crude oil 1.195 percent lower in its wake.
"We're bemused a bit by it," William Ramsay, deputy director of the International Energy Agency, said of the price reaction. Continued...
