LONDON, 19 April 2005 — World oil prices came under pressure yesterday with supply worries easing further after the president of OPEC said the organization would increase output by 500,000 barrels per day (bpd) in May.
New York’s main contract, light sweet crude for delivery in May, rose 21 cents to $50.70 per barrel having fallen below $50 in earlier electronic deals. In London, the price of Brent North Sea crude oil for delivery in June dropped 71 cents to $50.90 per barrel.
“In May, there’ll be an increase in production, because (growth in) demand in the third quarter will dictate an increase in production,” OPEC President Ahmed Fahd Al-Sabah, who is also Kuwait’s oil minister, told reporters in Parliament.
OPEC ministers raised output by 500,000 bpd to 27.5 million barrels when they met last month in the Iranian city of Isfahan.
The Organization of Petroleum Exporting Countries authorized also the organization’s chief to call for another similar increase if needed. Almost all OPEC members are producing well in excess of the official ceiling to the point that actual output on the market is already above 28 million bpd.
Oil prices have slumped since New York’s main contract struck a historic high point of $58.28 per barrel on April 4, the same day Brent crude rocketed to a record $57.65 on fears about possible supply shortages.
“There is nothing exceptional about the amplitude of this move in the current context, since prices leaped nearly six dollars in the opposite direction between March 30 and April 4,” Societe Generale analyst Frederic Lasserre said. He added that slowing demand for energy by China, rising US crude inventories, OPEC signals that it would increase production and a recent dollar rally have all contributed to prices tumbling.
Meanwhile, traders were digesting news that saboteurs set fire to a crude oil pipeline between the Kirkuk oil fields and the Baiji refinery in northern Iraq yesterday.
Workers rushed to put out the fire near Fatha, 250 kilometers (150 miles) north of Baghdad after the attack, said Mohammed Ali, assistant manager of a new oil infrastructure fire-fighting force.
Insurgents have repeatedly targeted Iraq’s economic infrastructure since US-led forces entered the country two years ago. Northern oil exports to the Mediterranean port of Ceyhan in Turkey have been stopped for the last four months because of continued attacks.
Elsewhere, production on the Norwegian Oseberg C oil platform in the North Sea, which usually pumps up 70,000 barrels a day, was briefly halted yesterday owing to a gas leak, platform operator Norsk Hydro said.
The leak caused losses of half a day’s worth of production, or about 35,000 barrels of oil. Norway, which is the world’s third-largest oil exporter after Saudi Arabia and Russia, normally has an average daily production of three million barrels.