WSJ:OIL FUTURES: Crude Up On OPEC Indecision, Weekly Inventory Data
SINGAPORE (Dow Jones)--Crude-oil futures rose Thursday in Asia, supported by a bigger-than-expected decline in weekly U.S. crude inventories and a decision by the Organization of Petroleum Exporting Countries to leave its production quota unchanged.
"The amount of OPEC crude that is required for market balance over the next two quarters is so large that, in our view, it may now be too late to fully contain the upside" for prices, Barclays Capital analysts said in a note to investors.
On the New York Mercantile Exchange, light, sweet crude futures for delivery in July traded at $101.57 a barrel at 0712 GMT, up $0.83 in the Globex electronic session. July Brent crude on London's ICE Futures exchange rose $0.38 to $118.23 a barrel.
"There ain't no sheriff in this town, or at least there will not be for at least another six months," the analysts said, referring to the absence of an OPEC meeting until December.
Although OPEC wasn't able to reach a consensus, key producer Saudi Arabia has said it will meet market demand.
"Saudi Arabia can raise its production capacity by around 2 million barrels a day, although the other OPEC members will only increase if they have the capacity," Tokyo-based Newedge Japan trader Yusuke Seta said.
High crude prices will eventually "hurt the global economy" and eventually fall in the third quarter of the year, he said.
The freeze on OPEC output doesn't affect the supply of crude as much as the price, Peter Beutel, president of Cameron Hanover, said in a note. "That influence is psychological rather than based on any diminished supply element."
Member countries opposed to higher OPEC production may face the prospect of weaker oil prices in the longer term, Beutel added.
"The Saudis do not like to hear the answer 'No,'" he said, "but to have it shoved in their faces strikes us as being an insult that they will not forget."
"This may come back to haunt Iran or Venezuela."
The U.S. Energy Information Administration said Wednesday that crude stockpiles fell by 4.8 million barrels last week. The drop was larger than expected, with analysts polled by Dow Jones Newswires predicting a 400,000-barrel decline.
Nymex reformulated gasoline blendstock for July--the benchmark gasoline contract--rose 142 points to $2.9929 a gallon, while July heating oil traded at $3.0984, 47 points higher.
ICE gasoil for June changed hands at $973.00 a metric ton, up $2.50 from Wednesday's settlement.
