OPEC members raise Crude Oil output
OPEC members raise Crude Oil output
The Key members of OPEC are joining Saudi Arabia in raising output to cool soaring prices and allay fears of a supply crunch in the West.
The behind-the-scenes move by Kuwait, the United Arab Emirates and Nigeria reflects growing unease among OPEC members over the threat to the global economic recovery from Crude’s rise on the back of the worsening crisis in Libya.
US Crude Oil prices increased to their highest levels since September 2008 Monday, trading at an intra-day high of 106.95 bbl, as Brent, the European benchmark, hit a session high of 118.50. Gold rose to a new record high of 1,444 oz.
Industry officials said the production increase, expected by early April, would, together with an earlier rise by Saudi Arabia, almost make up the shortfall in supply from falling Libyan Crude exports.
They said that Kuwait, the UAE and Nigeria were to ramp up their production by as much as 300,000 BPD in coming weeks. Riyadh has raised its output by about 700,000 BPD.
The rise in output is the result of both a policy decision that reduces the need for an emergency OPEC meeting and oilfields coming back into production after maintenance.
The International Energy Agency, the Western countries’ Oil watchdog, estimates Libya’s Crude Oil production has fallen by about 1M BPD, down 66% from a prevailing output level of 1.58M BPD before the start of the crisis 3 weeks ago.
In Libya, troops loyal to Muammer Gaddafi battled with rebel forces outside the Ras Lanuf Oil terminal and launched a number of air strikes Monday, continuing a counter-offensive to prevent the rebels’ advance West.
Some traders voiced fears that the fighting was turning into a civil war, other said Col. Gaddafi was in negociations with the rebel leaders for safe passage for he and his family out of the country.
Shayne and I believe that the Crude Oil markets are pricing in curtailing of Libyan Crude exports now, as the OPEC cartel, which controls 40% of Global Crude Oil supplies, is divided about the need to increase output.
Saudi Arabia responded quickly by pumping more Crude Oil some members are quietly following, others including Iran and Algeria oppose an increase and see no shortage of Crude Oil in the market and wish to enjoy the higher prices.
“OPEC is evaluating whether it needs to meet or not,” Qatar’s Oil Minister, Mohammed Saleh al-Sada, told reporters in Doha.
The cartel has been debating whether to call an emergency meeting but has so far decided against it, officials said.Riyadh is pumping about 9.2-9.3M BPD after raising production by 700,000 BPD, according to a senior Western official.
Other officials said Kuwait and the UAE were boosting output jointly by about 100,000-150,000 BPD in the next few weeks.
Nigeria is set to add another 150,000-200,000 BPD in April with the return from maintenance of the Qua Iboe and Bonga oil fields, which produce high quality Crude Oil.—Paul A. Ebeling, Jnr. www.livetradingnews.com
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