Gulf States To Stop Spot Sales.

With Saudi Aramco having cut production by 380,000 b/d to 8.72m b/d and Iran having lowered output by 175,000 b/d to 4m b/d, Kuwait and the UAE have each lowered production by 100,000 b/d by eliminating sales to the spot market. The cuts took effect on Nov. 1, in line with OPEC's agreement in Doha on Oct. 20 to cut the group's production by 1.2m b/d (see omt18-OPEC-NOPECreviewOct30-06). Kuwait's spot crude normally goes to term customers wishing to top-up their contracted supplies. Production cuts have been announced by almost all the other OPEC members.

World oil prices slid on Nov. 1 as traders anticipated a healthy update on energy stockpiles in the US later in the day. December WTI fell 40 cents to $58.33/b in electronic deals before the official opening of NYMEX. In London, December Brent shed 31 cents to $58.72 in electronic trading.

Prof. Michael Economides of the University of Houston on Nov. 1 said: "There's a premium on [the crude] oil price today. $40 a barrel is the equilibrium price and this is the price at which oil should be selling. In the near term, my prediction is $65 a barrel, perhaps $70 too and it will not go below $60 a barrel as long as we have geo-political and other issues", he told Gulf News on the sidelines of Energy 2030 Conference.

Earlier, in his address, Economides told delegates oil producers must be more sensitive towards consumers and called for resolving geo-political issues amicably. "Geo-political issues in an era of inter-dependence have to be resolved not by war but by negotiations. But producing countries have to allow access to production and be aware of the consumer world's needs", said Economides.

Economides said oil will continue to be the dominant source of energy for the next 300 to 400 years despite developments in the field of alternative energy. He added: "Sunshine is free but solar energy is expensive and oil will dominate for the next three to four centuries and we will not be a solar-dependent world. There are no alternatives to hydrocarbon energy in the foreseeable future". But natural gas will take considerable share from crude oil as the premier fuel over the next two decades. "There are three dozen countries that are legitimate potential suppliers of world-class volumes of natural gas. This will further deemphasise OPEC. For the US and Europe, it will considerably reduce major geo-political vulnerabilities directly related to the Middle East, where one finds five of the six countries in the world with over 75 billion barrels of oil reserves". Echoing similar sentiments, Melanie Kenderdine, vice president of the Gas Technology Institute in Washington, said natural gas will gain prominence due to global growth in energy demand and the abundance of gas as an energy resource with roughly 6,000 TCF of proven reserves.