Business | Oil & Gas
Oil below $127 as Opec stands firm
Oil was below $127 a barrel on Monday, after Opec's president said the producer group would not call an early meeting and was unlikely even at its September gathering to boost supply as the world had enough oil.
- Reuters
- Published: 00:21 May 20, 2008
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London: Oil was below $127 a barrel on Monday, after Opec's president said the producer group would not call an early meeting and was unlikely even at its September gathering to boost supply as the world had enough oil.
US light crude for June delivery was up 12 cents at $126.41 a barrel by 1518 GMT. It closed at $126.29 a barrel on Friday after touching a record peak of $127.82 earlier that day after publication of a bullish price forecast from investment bank Goldman Sachs.
London Brent crude was down 53 cents at $124.46.
Chakib Khelil, president of the Organisation of Petroleum Exporting Countries, said oil markets were well supplied and blamed high prices on speculation, a weak dollar and geopolitical problems.
"As for Opec, indications shows that there is no shortage [of supply]," he said in Algiers.
Khelil said Opec would not meet before its next scheduled gathering in September and that this meeting was unlikely to result in an output increase.
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"All in all, there is little indication that we are on the verge of a major price breakdown," said Edward Meir, analyst at broker MF Global. He said a production increase from Saudi Arabia, revealed on Friday, was only "token" in terms of extra production.
Saudi Arabia has boosted oil output by 300,000 barrels per day to meet demand and compensate for other producers' lower output, Saudi Oil Minister Ali Al Naimi said on Friday.
Yesterday, the Saudi state news agency quoted Al Naimi saying that current level of oil output was fulfilling market demand. US President George W. Bush said on Saturday he was pleased with the Saudi move, but it was not enough to solve problems in the US.
But comments by Opec oil ministers yesterday all highlighted that global oil supplies are enough to cope with demand.
Qatar oil minister Abdullah Al Attiyah also said there was no need to boost oil supplies to global markets. "The market doesn't need more oil," he said, pointing to a cut in forecast oil demand growth by the International Energy Agency.
"There is more oil in the market than consumers want," said Iraqi oil minister Hussain Al Shahristani.
Iraq aims to boost total oil exports to 2.3 million barrels per day from two million bpd by the end of the year, he said.
Oil prices have risen sixfold since 2002 and doubled since last year as rising demand from China and other developing nations has stretched spare production capacity.
Diesel has taken centre stage in the world energy crunch as tight power supplies in China, South Africa, Chile, Argentina and parts of the Middle East triggered a boom in demand for middle distillates for electric generators.
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