BLBG: Crude Oil Little Changed as OPEC Predicts Demand Recovery
Oil was little changed after reaching a six-month high as OPEC cited expectations of recovering demand for their decision to OPEC decided to leave production quotas unchanged today.
Saudi Arabian Oil Minister Ali al-Naimi said after today’s meeting in Vienna that the Organization of Petroleum Exporting Countries opted not to alter its output targets because “prices are good, the market is in good shape.” The American Petroleum Institute said yesterday oil supplies fell 2.82 million barrels to 364.7 million in the week to May 22. The Energy Department will release its data today.
“The most significant part of the meeting for me were al- Naimi’s comments that he sees demand recovery, in the present tense, in the Middle East, Asia and Latin America,” said Mike Wittner, head of oil market research at Societe Generale SA in London. The decision itself “was totally priced in.”
Crude oil for July delivery rose as much as 48 cents, or 0.8 percent, to $63.93 a barrel on the New York Mercantile Exchange, the highest for a contract nearest to expiry since Nov. 13. It traded for $63.48 at 1:56 p.m. London time.
“Given the recent rally to above $60 a barrel and a global economy in recession, it would not have been possible to justify further cuts,” said Harry Tchilinguirian, senior oil market analyst at BNP Paribas SA in London.
Other ministers from OPEC, whose members supply 40 percent of the world’s oil, said the group will work toward finishing previously announced reductions. OPEC has yet to complete output cuts totaling 4.2 million barrels a day that the group agreed to late last year.
Production Ceiling
The production ceiling is 24.845 million barrels a day for 11 of its members. They pumped 25.812 million barrels a day in April, a May 13 report from the group showed. Iraq has no quota.
Brent crude for July settlement traded for $62.62 a barrel, 14 cents higher on London’s ICE Futures Europe exchange at 1:56 p.m. local time.
The U.S. recession will probably end in the third quarter, a survey of business economists showed. The world’s largest economy and energy consumer will begin to expand next quarter, according to 74 percent of economists in a National Association for Business Economics survey.
U.S. gasoline supplies dropped 758,000 barrels last week to 205.4 million, the API said.
API collects stockpile information on a voluntary basis from operators of refineries, bulk terminals and pipelines. The government requires that reports be filed with the Energy Department for its weekly survey.
The Energy Department is scheduled to release its supply report today at 11 a.m. in Washington, a day late because of the Memorial Day holiday.
U.S. gasoline supplies dropped 1.3 million barrels last week, according to the median of 13 estimates by analysts before the Energy Department report. Inventories fell 6.1 percent in the previous four weeks.
