NEW YORK, 21 June 2005 — With oil prices marching to new heights of close to $60 a barrel, the president of OPEC said yesterday the group will consider raising its output ceiling by half a million barrels as early as this week.
The Organization of Petroleum Exporting Countries raised its output target by that amount just last week, though the move appeared to have little impact on prices, which have risen by more than $10 a barrel in the past month because of concerns about limited refining capacity and rising demand for gasoline and diesel.
Light sweet crude for July delivery climbed 38 cents to $58.85 a barrel in midday trade on the New York Mercantile Exchange. Earlier, prices hit $59.23, an intraday record on Nymex, where oil futures have been traded since 1983.
Oil broker Mike Fitzpatrick at Fimat USA in New York said that any further action by OPEC this week may backfire. “If you add that additional half million barrels, people are going to be talking about OPEC having (production) capacity constraints,” he said.
Still, “it looks like we might have difficulty holding these levels. You’re seeing a great deal of reluctance among buyers to pay these higher prices,” he said.
Brent crude for August delivery broke the $57.65 per barrel peak it reached last April to set a new high of $58.58 yesterday on London’s International Petroleum Exchange. It later fell back to $58.01 a barrel, up 25 cents.
OPEC President Sheikh Ahmed Fahd Al-Ahmed Al-Sabah said yesterday that “if the prices continue to the end of this week at the same level, I will start consulting my colleagues to release the 500,000.” Asked by reporters in Kuwait what he meant by the end of this week, the minister said Friday.
Last week OPEC agreed to raise its official production ceiling to 28 million barrels, starting July 1, but that failed to soothe traders because OPEC’s output is already exceeding that level as producers seek to cash in on high prices.
Including Iraq, which is not bound by the quota system, OPEC is pumping close to 30 million barrels a day, or about 35 percent of global demand.
