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OPEC could open talks to raise oil production further

OPEC could start discussing a second increase in its oil production ceiling as soon as next week if crude prices hold at current levels, Kuwaiti Energy Minister and OPEC President Sheikh Ahmad Fahd al-Sabah said yesterday.

"Let us at least wait for a few days and see exactly how prices will go, if it continues as it is now, next week we will start our discussions," he said.

OPEC ministers decided on Wednesday to raise their oil production ceiling from 27 to 27.5 million barrels per day (bpd) and consider a further raise in quotas if prices remain high in the coming months.

The decision was quickly overshadowed in global oil markets by concerns over US inventory levels, which propelled the price of the New York contract for crude to a record of US$56.60 a barrel.

Light, sweet crude for April delivery rose US$0.11 to US$56.57 a barrel on the New York Mercantile Exchange by mid-afternoon in Asia. The previous intraday high, set in October, was US$55.67 a barrel. Heating oil prices rose by less than a cent to US$1.5940 a gallon (3.8 liters).

"This is not about lowering prices. It's about stopping them skyrocketing," Yasser Elguindi of New York-based Medley Global Advisers said on the International Oil Daily Web site. "We are going to be either side of US$50 with spikes to around US$60."

Traders are worried that demand could soon outstrip supply. China, the world's second biggest oil consumer after the US, is already guzzling more than a third of the world's crude supplies. Chinese fuel use will rise 7.9 percent this year, or 500,000 barrels a day, to 6.88 million barrels a day, according to the Paris-based International Energy Agency.

The agency said last week it expects petroleum needs this year to increase 2.2 percent, by 1.81 million barrels a day, to a new daily total of 84.3 million barrels.
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