OPEC will press harder in talks to resume in coming days to add 500,000 barrels a day to its oil-output quota to prevent record-high oil prices of US$57.71 a barrel from hurting growth, the group's acting secretary-general said.
"OPEC ministers will intensify their talks over the coming days and weeks," Adnan Shihab-Eldin told reporters yesterday at an oil and gas conference in Dubai, the United Arab Emirates. "Should the trend continue to be escalation in prices, no doubt OPEC will react."
OPEC ministers will resume talks this week on raising the output quota by 500,000 barrels a day to 28 million barrels a day as early as May and may add another half a million barrels a day in the third quarter, the group's President Sheikh Ahmad Fahd al-Sabah said on Saturday.
Crude oil futures in New York rose to a record yesterday on speculation that OPEC may fail to raise output fast enough to meet rising demand. The group supplies almost 40 percent of the world's oil.
The 11-nation group is ready to add as much as 800,000 barrels a day in the fourth quarter, raising its quota to 30.3 million barrels of oil a day, in order to meet global demand, Shihab-Eldin said.
"There seems to be a little bit of panic about gasoline despite relatively good stockpile levels," said Tony Machacek, a broker at Bache Financial Ltd in London. "It's good of OPEC to make a gesture to try to raise production, but they can only increase grades of crude that the market doesn't need."
Crude for May delivery jumped as much as US$0.52, or 0.9 percent, to US$57.79 a barrel, a record in more than two decades of futures trading on the New York Mercantile Exchange. It was up US$0.26 at US$57.53 at 9:13am London time. It's "possible" that prices could reach US$60 this week, Machacek said. They have gained 67 percent in the past year.
Brent crude for May settlement added US$0.27 to US$56.78 a barrel, up 40 percent this year, on London's International Petroleum Exchange. Prices touched US$56.89 earlier yesterday, the highest price since futures were introduced on the IPE in 1988.
OPEC agreed on March 16 to boost output quotas by 500,000 barrels a day, and pledged to boost the group's production ceiling by a further 500,000 barrels a day to 28 million barrels a day if prices rose and demand warranted more supply.
"We are concerned about the prices," Adnan Shihab-Eldin said in an interview in Kuwait yesterday. "We don't want to face a boom-and-bust situation."
A decision by OPEC to increase production during the second quarter, when demand declines, signals a shift in strategy, with the group allowing inventories to increase for use later in the year, creating a buffer against potential shortages.
OPEC states with quotas, all except Iraq, are now producing close to 28 million barrels a day, which is 500,000 barrels above the current output quota, Sabah said. The group now has a spare oil-output capacity of 2 million barrels a day and this will rise to 3 million barrels a day by the end of the year as members boost their production capabilities.
"We're starting to see demand softening," Robert Skinner, president of the Oxford Institute for Energy Studies, said in an interview in Kuwait. "People don't expect China to consume as much this year."
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