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| OPEC Plan to Increase Production Takes Heat Off Oil Price |
| 2004-05-20 |
| Oil prices were on the skids today as traders took profits on speculation that supply may not be so tight in coming months, writes Jane Padgham. The world’s largest oil exporters are planning to step up production in an effort to dampen spiralling prices, according to reports. Saudi Arabia appears to have persuaded even the most reluctant members of the Organisation of Petroleum Exporting Countries (OPEC) to agree to lift the cartel’s output quota by 6 percent, or 1.5 million barrels a day, when they meet in Amsterdam on Saturday. But some, including Venezuela and Iran, do not want to give the impression they are caving in to pressure to lower prices. They are expected to argue the final decision should not be taken before Opec’s next formal meeting, in Beirut on 3 June. US crude fell 45 cents to $40.09 a barrel, extending yesterday’s losses which saw it dive more than a dollar after hitting a record $41.85 on Monday. In London, Brent crude fell 35 cents to $36.60. "There’s a lot of bullish news factored into the price and the market is vulnerable to any moderation in demand and/or pick-up in supply," said David Thurtell, commodities strategist at Commonwealth Bank of Australia. Analysts expect data due today to show a rise in US gasoline stocks ahead of the key summer driving season. Meanwhile, the FTSE 100 share index was expected to open 10 points higher at 4424, after a robust performance by the Dow last night. |
| Posted by:Mark Espinola |
| #3 Part of pressure on oil prices is increasing Chinese demand for oil.In a few years China went from oil exporter to huge importer. BTW,it would be interesting to know if there is any capital flight from Suadi Arabia to Swiss banks.Recently Saudis dumped Euro and insisted OPEC raise production after steadily year of demanding cuts in production.Almost sounds like someone wants some ready cash in near future that is spendable anywhere. |
| Posted by: Stephen 2004-05-20 3:15:35 PM |
| #2 as of noon today, US crude was back to $41.50 or so. |
| Posted by: mhw 2004-05-20 1:47:24 PM |
| #1 Also heard at that BBQ about how SA is going to increase oil production just before the election to help GWB get reelected. Boy that made me giggle. I asked him where he heard that and he said he read it on the web. But from what I understand, much of the run up of oil prices has been due to speculative buying. I'm not a commodity expert and I'm not sure of the correct terms but it was stated that if up front cost of this speculative buying was increased there wouldn't be this much pressure on prices, among other things. |
| Posted by: Lucky 2004-05-20 12:19:52 PM |