Crude Oil, Steady Today, May Fall as More Russian Output Seen
By Stuart Wallace
London, June 27 (Bloomberg) -- Crude oil, little changed today, may fall after Russia said it will boost exports in a bid to take market share from Middle East rivals, traders said.
Rising output from the world's No. 2 supplier will offset yesterday's decision by the Organization of Petroleum Exporting Countries to maintain quotas at an 11-year low. Russia plans to send another 150,000 barrels of oil a day to the market in the next quarter and boost production in 2003.
``Cooperation between OPEC and Russia to reduce exports has collapsed,'' said Hidefumi Jinnai, a crude oil trader at Japanese refiner Cosmo Oil Co. ``I'm very comfortable now as the price is no longer rising. I won't rush to buy.''
Brent crude oil for August settlement was unchanged at $25.24 a barrel on electronic trading on the International Petroleum Exchange in London. Oil has gained 27 percent this year on traders' confidence about OPEC's ability to restrict supply.
Prices may also fall after Saudi Oil Minister Ali al-Naimi yesterday said the world's largest oil producer and the rest of OPEC may raise production in the fourth quarter. Iran's oil minister, Bijan Namdar Zanganeh, said an increase then is probable.
A fourth-quarter increase in demand may be delayed by falling stock markets worldwide, which may hurt economies and stifle growth, traders said. Stocks fell yesterday after WorldCom Inc., the second-biggest U.S. long distance phone company, followed Enron Corp. in reporting bogus earnings.
OPEC Fearful
``OPEC has to be very fearful that all this rumpus that we're seeing in the equities markets could actually lead to a delay in fourth quarter demand coming,'' said Robert Laughlin, a director of GNI Ltd. in London. That delay could push recovery ``maybe back to the first or second quarter of next year.''
In the U.S., crude oil for August delivery was recently down 1 cent at $26.75 a barrel in electronic trading on the New York Mercantile Exchange. Earlier, it declined as much as 0.5 percent to $26.63.
Russia will build reservoirs on the Black Sea, expand pipelines to the Baltic Sea and negotiate with Hungary and Croatia to allow greater shipments through the Balkans, Semyon Vainshtok, president of Russia's state-run pipeline monopoly, RAO Transneft, said in an interview yesterday.
Prices may also be hurt by yesterday's report from the U.S. Department of Energy, which said crude oil supplies fell 1.1 percent to 319.6 million barrels last week. That decline was less than the 2 percent fall to 317.8 million barrels reported a day earlier by the American Petroleum Institute. |
