Oil up in Asia as OPEC refuses to raise output

Oil up in Asia as OPEC refuses to raise output

SINGAPORE (Reuters): Oil prices in Asia inched higher on Thursday, as OPEC signaled an output rise was not likely in the near term, despite current sizzling prices.

The news gave an added lift to a market that has already seen crude prices rise over 12 percent in the last fortnight on the back of low stocks in the United States, oil's largest consumer.

At 0721 GMT, U.S. light crude futures were at $31.90 per barrel, up 10 cents from the New York settlement, where the contract had ended 13 cents higher at $31.80.

Brent crude futures on London's IPE settled on Wednesday 35 cents higher at $32.53, after hitting a 10-year high of $32.80 during Tuesday's IPE trade.

OPEC President Ali Rodriguez of Venezuela said on Wednesday the group would stick to its price band mechanism, and had no plans to raise production yet.

"It's not planned yet. Of course if the conditions which were established (in the band mechanism) occur, then it (a production increase) will happen," Rodriguez said in Caracas when asked if OPEC intended to increase production at the moment.

Saudi Arabian newspaper al-Riyadh also reported on Thursday that OPEC was not expected to take any action on high oil prices ahead of the group's Vienna meeting in September.

Al-Riyadh quoted OPEC experts as saying there was no reason to activate the cartel's price band mechanism as the conditions --that OPEC's crude basket price stay above $28 a barrel for 20 days in a row --had not been met.

"The experts recalled that the OPEC price band mechanism agreed at the Vienna meeting last June stipulates a production increase if oil prices exceed $28 a barrel of OPEC oil and not the North Sea production by which prices are measured and on condition that the rise in prices continues for 20 consecutive days," the newspaper said.

According to the price band mechanism, OPEC should raise or lower output by 500,000 barrels per day only if its basket of seven crudes moved above the $22-$28 price range for 20 consecutive days or below the band for 10 days.

OPEC's basket price was last at $28.69 a barrel on Tuesday, keeping it above the price ceiling for the second consecutive day.

U.S. Energy Secretary Bill Richardson said on Wednesday he was concerned by hawkish statements from Venezuela on oil prices which he blamed for high prices.