HOUSTON, Mar. 22 -- The US spot market price and near-month futures price for benchmark crudes dipped slightly Mar. 21 on renewed speculation that the Organization of Petroleum Exporting Countries might soon raise its production quota by another 500,000 b/d.
OPEC ministers agreed Mar. 16 to an immediate hike in the group's official production quota by 500,000 b/d to 27.5 million b/d, which is below the acknowledged production of 27.7 million b/d among the 10 affected members, minus Iraq. However, OPEC members gave Conference President Ahmad Fahad Al-Ahmad Al-Sabah, Kuwait's energy minister, the authority to boost the group's quota by an additional 500,000 b/d should oil prices remain high prior to their next meeting June 7 in Vienna (OGJ Online, Mar. 16, 2005).
In its monthly report issued Mar. 17, OPEC predicted that at least some of the group's extra production would be needed to meet increased demand in the second half of this year. "OPEC, on its part will continue to accelerate efforts to increase production to meet rising demand," the report said.
Over the weekend, Purnomo Yusgiantoro, Indonesia's energy minister, said demand meanwhile is expected to fall by 1.5 million b/d this spring and that OPEC is expected to increase production.
However, OPEC also said in its monthly report that the "persistent shortage of appropriate refining capacity" is expected to keep upward pressure on prices for both crude and petroleum products. The report also estimated that OPEC production overall had jumped by 200,000 b/d to 29.6 million b/d in February.
The April contract for benchmark US sweet, light crudes lost 10¢ to $56.62/bbl on the New York Mercantile Exchange. On the US spot market, West Texas Intermediate at Cushing, Okla., continued to track the near-month futures price, down by 11¢ to $56.62/bbl.
Other commodities reported gains, however. The May crude contract on NYMEX gained 22¢ to $57.46/bbl. Gasoline for April delivery jumped by 2.01¢ to $1.60/gal, while heating oil for the same month inched up by 0.17¢ to $1.5735/gal.
The April natural gas contract increased by 4.5¢ to $7.32/MMbtu, "lifted by late short covering [of excess sales contracts] by small day-trading funds and locals, some late buying in crude oil, and relatively cool weather forecasts for this week that helped support the cash [natural gas spot] market," said analysts at Enerfax Daily.
In London, the May contract for North Sea Brent crude inched up by 6¢ to $55.65/bbl..
The average price for OPEC's basket of seven crudes on Mar. 21 regained 9¢, the exact amount lost the previous day, back to its record level of $51.76/bbl.
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