KUWAIT CITY, 2 June 2005 — OPEC’s President Ahmed Fahd Al-Sabah said yesterday that the oil producing organization will most likely maintain current output levels at its next meeting set for June 15 in Vienna. “I started consulting with some of my colleagues. I think the situation is that we will continue to maintain our production (levels) now,” Ahmed, who is also Kuwait’s energy minister, told reporters in Parliament. “And this will be... unless there is something unexpected in our meeting in June,” he added.
The OPEC chief also said the organization will not increase its official output quota to account for over-production, saying: “We will keep the ceiling the same and also the (level of) over-production.” The 11 members of OPEC are producing in excess of 30 million barrels per day compared with an official fixed ceiling of 27.5 million bpd for the OPEC-10 (excluding Iraq), agreed in March in the Iranian city of Isfahan.
Ahmed said the organization will not cut output for the third quarter of 2005. “We will continue with the same production (level) in the third quarter,” he said. “I already consulted several of the members and they have the same feeling,”
Meanwhile, oil prices climbed to a five-week high near $55 a barrel yesterday, led by a counter seasonal rally in heating oil as speculators bet on a looming distillate supply crunch. “Once refineries focus on gasoline production, distillate supplies may become very tight,” said Phil Flynn, an analyst at Alaron Trading in Chicago. US light sweet crude rose $2.61, or 5 percent, to $54.58 a barrel - the highest since late April - while heating oil futures jumped 8.75 cents to $1.537 a gallon. London Brent rose $2.47 cents to $53.20. Refineries typically produce more gasoline and less of other fuels in the spring to meet summer driving demand, and analysts say the industry may have trouble keeping storage tanks filled with diesel, jet fuel, and other distillates in the midst of rising consumption.
“Globally, distillates are really tight right now,” said Doug MacIntyre, an analyst at the federal Energy Information Administration.
US distillate demand growth is running at more than 3 percent this year, more than gasoline or crude, due in part to higher diesel use from truckers moving Chinese products from the West Coast to markets in the rest of the country, and rising jet fuel consumption from airlines. Heating oil normally strengthens in the autumn ahead of the colder winter weather, while gasoline normally rises in the spring heading into peak driving season.
For the next indications of the adequacy of supplies, traders were awaiting US stockpile data to be released today.
Analysts polled by Reuters expected on average a 100,000 barrel crude build, together with a 1.3 million barrel rise in distillate stockpiles and a 500,000 barrel growth in gasoline inventories. Crude stockpiles fell unexpectedly in the last data release, triggering a $5 gain on US crude over last week.
