OPEC increases oil production by 0.9 percent to reduce prices
OPEC increases oil production by 0.9 percent to reduce prices
Dania Saadi, Bloomberg/Dubai
The Organization of Petroleum Exporting Countries boosted its oil output by 0.9 percent over the past two weeks to lower prices, the group's president said.
"Oil prices have started to drop, particularly after the smooth transition of power to King Abdullah in Saudi Arabia," Sheikh Ahmad Fahd al-Sabah said on Friday, state-owned Kuwait News Agency reported on its Website on Saturday. OPEC boosted output by 0.9 percent to 30.4 million barrels of oil a day, he said.
Oil for September delivery closed on Friday at $62.31 a barrel on the New York Mercantile Exchange, 0.3 percent, or 19 cents, lower than the record $62.50 a barrel reached on August 3. King Fahd died on Aug. 1.
Oil prices increased after the king's death amid concern about stability of supply, said al-Sabah, who is also Kuwait's oil minister. Refinery problems in Asia and the U.S. also helped push prices higher, he said. OPEC's 11 members are pumping oil near their limit to curb prices, which have gained by half since the beginning of the year. Concerns that gasoline demand would outpace supply helped push oil prices to a record this week.
OPEC ministers are scheduled to meet Sept. 19 in Vienna to discuss boosting output quotas in the third and fourth quarters. The group supplies almost 40 percent of the world's oil.
Members with quotas, all except Iraq, agreed in Vienna on June 15 to raise their official production ceiling as of July 1 by 500,000 barrels of oil a day (bpd), or 1.8 percent, to 28 million bpd.
The group's president was also authorized to begin talks on a further 500,000 barrel-a-day increase if he thought it needed. The OPEC president had said in Vienna he would start talks on a further raise if oil stayed above $50 a barrel for seven days. Crude in New York last closed below $50 a barrel on May 24.
Global oil use will reach 85.9 million bpd in the fourth quarter of this year, the International Energy Agency, an oil adviser to 26 oil-importing countries, said in a monthly report on July 13. This means OPEC will need to pump 29 million bpd of crude in the final quarter.
That fourth-quarter demand for OPEC oil, the so-called "call on OPEC," was revised down by 700,000 barrels a day from its previous report, mostly because of the cut to world demand, the agency said.
OPEC's oil production rose 1.1 percent, or 328,000 bpd, to an average 30.3 million barrels in July amid rising fuel demand and record prices, according to Bloomberg figures. It was the highest since October, when members pumped at a 25-year high of 30.54 million bpd, based on U.S. Energy Department records.
The 10 members with quotas exceeded their production target last month by an average 380,000 barrels a day, according to Bloomberg figures.
OPEC's 11 members are Saudi Arabia, Iran, Venezuela, Iraq, United Arab Emirates, Kuwait, Nigeria, Libya, Indonesia, Algeria and Qatar. More than half the group's production is shipped from the Persian Gulf.