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Crude futures drop as OPEC suspends talks Analysts expected cartel to drop discussion of second output increase on belief supply adequate to meet current demand George Jahn Associated Press Writer
Crude futures fell March 30, reflecting lessened worries about supplies after the Organization of Petroleum Exporting Countries suspended talks on a second output increase.
Analysts said the market expected OPEC’s move, which signaled the group’s conviction that supply was adequate to meet present demand. Traders, meanwhile, were expecting growth in crude oil inventories in the energy supply report from the United States later in the day.
U.S. government data the week of March 21 showed American inventories of crude oil at 309.3 million barrels, or 8 percent above year-ago levels, while gasoline supplies were at 217.3 million barrels, also 8 percent above year-ago levels.
Light, sweet crude on the New York Mercantile Exchange was down 3 cents to $54.20 a barrel by midday March 30 in Europe. Hating oil fell marginally to $1.5560 a gallon, while unleaded gasoline was up slightly at $1.5735 a gallon.
Brent crude was up 9 cents to $53.12 at on the International Petroleum Exchange in London. OPEC not expected to meet until June In the latest signal that OPEC considered the market under control, Qatar’s oil minister, Abdullah bin Hamad Al Attiyah, said he did not expect the group to meet before June, as scheduled, saying there were no supply problems.
On March 29, OPEC President Sheik Ahmed Fahd al Ahmed Al Sabah, who is also the oil minister of Kuwait, said the group would be watching oil prices to determine whether another production increase is necessary.
“We will resume talks once oil prices increase,” Al Sabah said.
His comments assured traders that the producers’ group no longer feared an immediate supply crunch.
“The comments from OPEC have put a cap on any upward price movements,” said energy analyst Daniel Hynes of ANZ Bank in Melbourne, Australia.
OPEC agreed earlier in March to raise production quotas by 500,000 barrels per day and said it would consult on whether to increase them by a further 500,000 if prices continued to rise. Al Sabah: Demand could grow Still, Al Sabah warned that demand could grow another 2.2 million barrels a day this year, reflecting not only the high demands of the summer driving season in the Northern Hemisphere but also continuing world economic growth.
OPEC will need to pump 28.5 million barrels a day in the summer — an increase of 1 million barrels a day from current output — he said.
“I believe there will be an increase in production at the end of the second quarter because the market will need it,” he said.
Al Sabah also cautioned that daily demand could rise as high as 33.3 million barrels in the peak winter months, providing support to prices.
Worldwide demand is forecast by the International Energy Agency to rise 2.2 percent this year to 84.3 million barrels a day.
But for now, “clearly, they think they’ve done enough,” Kevin Norrish, head of commodities research at Barclays Capital in London, said of OPEC’s decision to hold off on another increase in the output ceiling.
Because of concern about the fourth quarter of the year — when winter traditionally jacks up demand in the Northern Hemisphere — “to some extent, saving what you’ve got in case you need it later looks like a sensible decision to make,” he said.
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