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OPEC extends its oil output quota for an additional three months
By Bruce Stanley Associated Press Business Writer
OPEC extended its quota for oil production by an additional three months and said it would meet again in September to determine if an increase in output is warranted then.
The Organization of Petroleum Exporting Countries decided June 26 that oil supplies are sufficient for the modest growth in demand it has forecast for the year. OPEC said it was satisfied with oil prices at current levels and believed it could best ensure they stay firm by not increasing output during the summer months.
Still, some analysts said OPEC’s agreement to roll over its daily quota of 21.7 million barrels was unlikely to have a major impact on prices, particularly if the group boosts output in the fourth quarter as many expect it to do.
Oil selling in mid-$20s OPEC has realized its goal in recent months of selling oil at prices in the mid-$20s a barrel. Stirrings of an economic recovery in the United States, together with political tensions in the Middle East have helped lift crude prices by more than a third since December.
Contracts of North Sea Brent crude for August delivery closed at $25.24 a barrel in London, up 4 cents from June 25. August contracts of U.S. light, sweet crude were 2 cents higher, at $26.78 a barrel in New York.
“Right now the market is in a good balance,” Saudi Arabian Oil Minister Ali Naimi told reporters before the meeting began. “There is no need for additional supply. The price is reasonable. Supply is adequate. Demand is OK.”
OPEC’s decision at this meeting was relatively easy, but the group is likely to have a harder time determining output policy when it meets again on Sept. 18.
The group acknowledged that some of the strength in current crude prices was due to political factors rather than forces of supply and demand — an apparent reference to turmoil in the Middle East, home to a majority of the group’s 11 member countries.
“They want to see really clear, unambiguous signs that the market is tightening, and when they do, they’ll increase production. They’re being cautious,” said Raad Alkadiri, an analyst with The Petroleum Finance Co., a consultancy based in Washington.
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