SINGAPORE World oil prices continued to ease on Friday, awaiting a United States decision on whether to allow a rare release of some of its emergency stockpiles to ensure plentiful supplies this winter.
The OPEC producers' cartel warned that crude was in overproduction and any U.S. dip into strategic reserves might ease prices for now but would not solve a longer-term problem of refinery bottlenecks.
U.S. benchmark light crude Futures for November stood 21 cents lower in Asia at $33.79 a barrel, having slid $1.24 in volatile New York dealings to $34.
Oil became the focus of U.S. domestic politics on Thursday as presidential nominee Al Gore called for the Clinton administration to open up some of the strategic reserves to ease the burden of rocketing fuel costs on American consumers.
Vice president Gore proposed that President Bill Clinton start selling oil from the 571 million-barrel Strategic Petroleum Reserve in batches of five million barrels to boost supplies ahead of winter.
Republican opponent, Texas Governor George W. Bush, slammed the proposal as an election year political ploy that could threaten national security.
Crude inventories in the world's biggest petroleum consumer are running near 24-year lows and many fear a supply crunch of heating oil if the upcoming winter should prove to be severe.
New data this week showing fresh draws in stocks sent oil scampering to almost $38 a barrel, a level not seen since Iraq invaded Kuwait in 1990, the only instance when SPR has been tapped since its launch in the mid-1970s after the Arab oil embargo.
American consumers already have been hit hard by energy costs this year as gasoline prices soared in the summer because of a shortage of a new ultraclean grade of fuel.
U.S. Energy Secretary Bill Richardson, a proponent of a release, said a decision on the SPR was imminent. U.S. Treasury Secretary Lawrence Summers, who had previously blasted such an idea, fell into line and cautiously endorsed Gore's proposal.
OPEC Head Says Output Exceeds Demand But the head of the Organization of the Petroleum Exporting Countries (OPEC) warned that global oil supplies far exceeded demand at the moment.
OPEC President Ali Rodriguez said any release of SPR crude in the United States might dent prices but would not solve instability in the market.
OPEC, already pumping more crude than at any other time in the last 20 years, has hiked output three times this year by a total 3.2 million barrels per day to rein in prices.
Global fuel stocks have been drawn to low levels partly due to two years of crude output curbs by OPEC and other producers, brought in by a price slump in 1998.
Most output has been reinstated this year, but dwindling inventories have held afloat concerns of supply shortfalls and kept crude around $30 for much of the time.
This has ignited fears among consuming nations of increases in inflation and sparked warnings that global economic growth could be hurt, especially in import-dependent poor nations.
OPEC, whose latest output hike of 800,000 bpd will take effect from October 1, says oil producers are not to blame for high prices, which are more linked to refinery bottlenecks, financial speculation and high consumer government taxes.
"I insist there is no shortage of crude oil. There is a shortage of refined products and that is a result of the serious refining problem," OPEC President Ali Rodriguez told reporters.
Rodriguez, who is also Venezuela's oil minister, said crude oil production was running about two million bpd above world demand of almost 76 million bpd.
(Reuter)