OPEC Lifts Quotas, Oil Prices Still Rise
By Khaled Oweis and Andrew Mitchell
VIENNA (Reuters) - OPEC on Wednesday lifted oil supply quotas by one million barrels a day, four percent, in a renewed bid to force down stubbornly high crude prices.
The pact is designed to underscore the intent among the Organization of the Petroleum Exporting Countries to exert downward pressure on prices that last month neared $50 a barrel.
But the new deal is expected to make little difference to actual supply flows because OPEC is already pumping almost flat out.
With prices failing to react, and certainly showing no sign yet of a serious reversal, the agreement may only heighten worries about OPEC's inability to cope with the fastest growing oil demand in a generation.
"This is a signal to the market not a change in total output. It will have a psychological effect on prices," said Iranian Oil Minister Bijan Zanganeh.
"Practically speaking quotas are all but suspended at the moment so where they are set is not important," said Alirio Parra, a former OPEC president.
Traders ignored OPEC and crude traded up 76 cents to $45.10 a barrel as a hurricane battered U.S. Gulf oil operations and weekly data showed a big fall in U.S. crude stocks.
Officially, output allocations for the group that controls half the world's oil exports go up to 27 million barrels a day from November 1. But OPEC is already pumping more than that, at 28 million barrels daily, and leading producer Saudi Arabia has made a commitment to customers to keep deliveries high.
Producers worry that inflated energy costs may hamper world economic growth and dent crude demand growth led by China's booming economy.
But there is little evidence yet that rising fuel bills costs are slowing growth and investment funds continue to bet on oil.
Saudi Arabia rejected suggestions that it has lost control of prices that OPEC says are inflated by $10-$15 a barrel over levels warranted by supply-demand fundamentals.
"OPEC has not lost control of the market, it is market orientated," said Saudi Oil Minister Ali al-Naimi.
"We are not going to be pushing oil that is not wanted. If there is no shortage in the market then OPEC has not lost control."
Although Saudi still has a cushion of a million barrels daily of spare capacity it is not of the grade required by most refiners. "What we really need is more spare capacity and less sour crude for prices to go down," said Deutsche Bank analyst Adam Seminski.
OPEC output includes a large proportion of high-sulfur, or sour, heavy crude but world markets are short of transport fuels refined more easily from low-sulfur, light grades.
At least high prices have encouraged producers to accelerate plans to bring new oilfields onstream, promising to rebuild some spare capacity into a severely stretched world supply system.
Two new fields in Saudi Arabia will be pumping 800,000 bpd by the end of September, Saudi's Naimi said, perhaps giving it flexibility above its official 10.5 million bpd capacity.
Kuwait and Algeria also are adding extra volumes of about 300,000 bpd combined soon, their oil ministers said.
OPEC put off a decision on raising its official $22-$28 price target. Another meeting is planned for December 10 in Cairo to review output policy when a new price target could be settled. Some want a $5 increase in a range centered on $30 a barrel.
- Reuters
By Khaled Oweis and Andrew Mitchell
VIENNA (Reuters) - OPEC on Wednesday lifted oil supply quotas by one million barrels a day, four percent, in a renewed bid to force down stubbornly high crude prices.
The pact is designed to underscore the intent among the Organization of the Petroleum Exporting Countries to exert downward pressure on prices that last month neared $50 a barrel.
But the new deal is expected to make little difference to actual supply flows because OPEC is already pumping almost flat out.
With prices failing to react, and certainly showing no sign yet of a serious reversal, the agreement may only heighten worries about OPEC's inability to cope with the fastest growing oil demand in a generation.
"This is a signal to the market not a change in total output. It will have a psychological effect on prices," said Iranian Oil Minister Bijan Zanganeh.
"Practically speaking quotas are all but suspended at the moment so where they are set is not important," said Alirio Parra, a former OPEC president.
Traders ignored OPEC and crude traded up 76 cents to $45.10 a barrel as a hurricane battered U.S. Gulf oil operations and weekly data showed a big fall in U.S. crude stocks.
Officially, output allocations for the group that controls half the world's oil exports go up to 27 million barrels a day from November 1. But OPEC is already pumping more than that, at 28 million barrels daily, and leading producer Saudi Arabia has made a commitment to customers to keep deliveries high.
Producers worry that inflated energy costs may hamper world economic growth and dent crude demand growth led by China's booming economy.
But there is little evidence yet that rising fuel bills costs are slowing growth and investment funds continue to bet on oil.
Saudi Arabia rejected suggestions that it has lost control of prices that OPEC says are inflated by $10-$15 a barrel over levels warranted by supply-demand fundamentals.
"OPEC has not lost control of the market, it is market orientated," said Saudi Oil Minister Ali al-Naimi.
"We are not going to be pushing oil that is not wanted. If there is no shortage in the market then OPEC has not lost control."
Although Saudi still has a cushion of a million barrels daily of spare capacity it is not of the grade required by most refiners. "What we really need is more spare capacity and less sour crude for prices to go down," said Deutsche Bank analyst Adam Seminski.
OPEC output includes a large proportion of high-sulfur, or sour, heavy crude but world markets are short of transport fuels refined more easily from low-sulfur, light grades.
At least high prices have encouraged producers to accelerate plans to bring new oilfields onstream, promising to rebuild some spare capacity into a severely stretched world supply system.
Two new fields in Saudi Arabia will be pumping 800,000 bpd by the end of September, Saudi's Naimi said, perhaps giving it flexibility above its official 10.5 million bpd capacity.
Kuwait and Algeria also are adding extra volumes of about 300,000 bpd combined soon, their oil ministers said.
OPEC put off a decision on raising its official $22-$28 price target. Another meeting is planned for December 10 in Cairo to review output policy when a new price target could be settled. Some want a $5 increase in a range centered on $30 a barrel.
- Reuters
publicado por MP às 21:29
