Crude rallies despite Rodriguez output pledge
Brent crude oil futures rallied back on the International Petroleum Exchange (IPE) in London yesterday after slipping sharply on news of the Organization of Petroleum Exporting Countries (OPEC) Pres. Ali Rodriguez Araque's assurance that the oil exporting organization could raise output by a further 2 million b/d if "needed" by the market.
LONDON�Brent crude oil futures rallied back on the International Petroleum Exchange (IPE) in London yesterday after slipping sharply on news of the Organization of Petroleum Exporting Countries (OPEC) Pres. Ali Rodriguez Araque's assurance that the oil exporting organization could raise output by a further 2 million b/d if "needed" by the market.
The futures market seized on a rumored outage at Tosco Corp.'s refinery in Illinois in an attempt to reverse the recent downward trend in oil price that saw October futures, which had opened Wednesday at $32.01, retreat 51 cents to $31.50 by close of trading, influenced by Rodriguez's indication that OPEC felt no need for any such a production hike at present.
October Brent, which expired at the close of trade yesterday, settled at $31.94 / bbl, up 41 cents on the previous day.
The OPEC News Agency (OPECNA) had reported Rodriguez's reiteration that the organization was "committed to bringing crude oil prices into the range of $22-$28 / bbl." Rodriguez, according to OPECNA, maintains that prices will be driven down into that range by the output increase agreed to in Vienna on Sept. 10 "within the next few months."
News that the US was considering opening the tap on its Strategic Petroleum Reserve was also being seen by analysts as having a hand in placing a downward pressure on oil prices, though it is understood there remain fears in the futures market that "very low inventories and high demand" make the situation in the US "precarious."
OPEC yesterday released a statement in which the organization argued the extra 3.3 million b/d which it had pumped on to the market through production hikes in March, June, and September, was "well in excess of anticipated oil demand." The "real reasons" behind the markets' continued volatility, said OPEC, were "shortages in the [petroleum] products market caused by bottlenecks in the refining industry, speculation in the futures market, manipulation of the Brent market due to the dwindling volumes of this crude, and widening differentials between light-sweet and heavy-sour crudes."
"These are elements about which OPEC can do little or nothing at all,"OPEC said in its statement.
The organization struck a conciliatory note though when it added that it stood "ready to engage in fruitful dialog with consuming nations in order to reach a better understanding of the oil market" which might lead to an "open, transparent, and stable market, beneficial to all participants, producers and consumers."
At the OPEC conference in Vienna last week, the organization's heads of delegation penned in a meeting for Nov. 12 to size up whether a further production increase would be needed to cool the overheated oil price.
Meanwhile, in Tehran, Iranian Petroleum Minister Bijan Namdar Zangeneh reportedly confirmed that certain OPEC members had produced oil beyond their quotas in August, as many analysts had suspected, taking the teeth out of the organization's June output hike.
The minister, according to OPECNA, warned: "Violation of the decisions reached by all members will neither be to the benefit of the offending country, nor the other members." Zangeneh said that OPEC would "produce as much crude as it could, in line with [its] strategies, so as to bring the price to the level it favored."
Namdar was said to be optimistic that the US presidential elections and the seasonal "decrease in consumption with the approach of spring" would slow the upward trend in the oil price in the longer term.