By OGJ editors
HOUSTON, Jan. 14 -- The decision made Sunday in Vienna by members of the Organization of Petroleum Exporting Countries to hike their total oil production quota to 24.5 million b/d might not have had as large an impact on oil prices as anticipated.
Crude oil futures prices rallied on New York and London markets Monday. Traders said the 1.5 million b/d additional production announced by OPEC might not be enough to deal with a supply shortage and might not be enough to bring prices down. The quota change is effective Feb. 1.
Traders said a general strike in Venezuela has cut that country's oil exports by 2.5 million b/d, adding the proposed OPEC increase would not cover the slack. Meanwhile, traders also worry about Iraqi oil production falling because of a probable military conflict.
Mexico, a major non-OPEC producer and an oil supplier for the US, said it would raise its crude exports to 1.88 million b/d effective Feb. 1. But analysts said the OPEC move still is probably too little and too late to fix a supply shortage from Venezuela.
The February contract for benchmark US light, sweet crudes jumped by 63¢ to $32.26/bbl Monday on the New York Mercantile Exchange. The March position also gained 63¢ to $31.59/bbl. Unleaded gasoline for February delivery shot up 2.71¢ to 89.90¢/gal on NYMEX. Heating oil for the same month escalated by 1.85¢ to 88.38¢/gal.
The February natural gas contract rose 10.8¢ to $5.25/Mcf on NYMEX.
In London, the February contract for North Sea Brent oil gained 53¢ to $30.20/bbl on the International Petroleum Exchange. The February natural gas contract also climbed, rising 2¢ to the equivalent of $3.28/Mcf on IPE.
The average price for OPEC's basket of seven benchmark crudes was unchanged from Friday at $29.82/bbl Monday.
