Oil Nears $30 as OPEC Keeping Curbs
Monday, August 19, 2002 3:07 p.m. EDT
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NEW YORK (Reuters) - Surging oil prices hit 11- month highs just below $30 a barrel on Monday as Kuwait said it did not expect the OPEC cartel to ease supply curbs despite falling U.S. stocks and fears of military conflict in Iraq.
Oil traders have expected OPEC ministers meeting in Japan next month to loosen tough production limits as crude prices are nearing pain levels for Western consumer nations, and demand normally balloons in the last quarter of the year.
New York crude futures raced to a peak of $29.95, just three cents below levels struck in the immediate aftermath of last September's attacks on New York and Washington. Prices ended 57 cents up at $29.95.
International benchmark Brent crude oil in London closed 27 cents higher at $27.27 a barrel.
The Organization of the Petroleum Exporting Countries has held official production levels at the lowest level for a decade this year, helping to push crude prices up almost 50 percent despite sluggish fuel demand in a downbeat economy.
Middle East-dominated OPEC, which controls two-thirds of world exports, meets on September 19 to chart output policy for the fourth quarter.
Kuwait's acting oil minister Sheikh Ahmad al-Fahd al-Sabah said he did not expect the OPEC cartel to raise output unless the price of its basket of crudes went above $28 per barrel. OPEC's export price stood at $26.58 on Friday.
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Oil prices already carry a premium reflecting market fears of a supply hitch in the Middle East, home to two thirds of world oil reserves, as Washington pursues its policy to topple Iraqi leader Saddam Hussein.
Mike Rothman, oil analyst at investment bank Merrill Lynch, said he still expected OPEC to sanction higher output levels.
"Our view is that prices are approaching levels making both producing and large consuming nations uncomfortable," said Rothman. "We sense that the pieces are in place for OPEC to formally implement quota hikes sooner rather than later."
Consumer governments, led by the White House, fear that prices above $30 for U.S. crude could hit growth and endanger the tentative global recovery.
The United States, the world's largest oil consumer, has called on OPEC to raise flows by one million barrels a day from October to avoid a price spike this winter.
OPEC is cautious about raising supply too soon and jeopardising a three-year oil price boom that has generated windfall revenues to its governments.
The cartel itself said in a report on Monday that it overshot formal production limits by 1.8 million bpd in July.
Monday's gains extended a rise of more than $2 last week spurred by a steep slide in U.S. crude stocks to the lowest level for 17 months.
Analysts expect strong gasoline demand to make another dent in U.S. crude stocks when the industry group American Petroleum Institute releases its inventory report on Tuesday. |
