03/15 10:55
Crude Oil Steady as OPEC to Leave Quotas
Unchanged Through June
By Mark Shenk
New York, March 15 (Bloomberg) -- Crude oil was little changed after a 13
percent rally this month, as OPEC's decision at a meeting in Vienna to leave
production quotas unchanged in the second quarter will limit supplies on the
world market.
Saudi Arabian Oil Minister Ali al-Naimi said his country, the world's biggest oil
producer, will be ready to raise output after June if demand strengthens. OPEC's
index of oil prices has gained 21 percent this year to $22.79 a barrel, and the
group's president, Rilwanu Lukman of Nigeria, said prices had to top $28 before
members would increase output.
``They are not going to rush to damp this rally,'' said John Kilduff, senior vice
president of energy risk management at Fimat USA Inc. in New York. ``This is a
really anticlimactic meeting because they were expected to leave their quotas in
place.''
Crude oil for April delivery was down 8 cents at $24.48 a barrel on the New York
Mercantile Exchange. Prices were up 2.7 percent this week and were 23 percent
higher this year.
In London, Brent crude oil for May settlement was 15 cents lower at $24.53 a
barrel on the International Petroleum Exchange. Prices gained 3.9 percent this
week.
``We will have to see $30 crude oil in the U.S. before they raise their quotas,''
Kilduff said.
Current prices have been inflated by about $2 a barrel by speculation that the
U.S. was going to attack Iraq as part of the war on terrorism, Al-Naimi said in
Vienna.
``Saudi Arabia and OPEC are ready to bring the oil market back to stability if
disrupted by military action on Iraq,'' the minister said.
Lower World Supply
Members of the Organization of Petroleum Exporting Countries and other
producers, such as Russia and Norway, agreed to reduce daily global supply
starting Jan. 1 by almost 2 million barrels, or 2.6 percent, after prices fell to a
two-year low in November.
The producer group dropped its target price range of $22 to $28 a barrel after the
Sept. 11 attacks on the U.S. worsened demand for products such as jet fuel.
Members are betting that the rise in prices this year back into that range won't
interfere with an economic recovery.
Russia's compliance with its pledged export reduction of 150,000 barrels a day
has been poor, analysts said. The country will decide next week whether to
extend its commitment to limit exports for another three months.
``We will extend the moratorium, but the final decision will be taken with the
Russian oil companies,'' Oleg Gordeyev, Russia's deputy oil minister, said in
Vienna.
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