OPEC Unlikely to Change Crude Output.
OPEC pronounced the global market for crude stable and sound as it opened a meeting Wednesday, signaling that the cartel is unlikely to tamper with current production despite record-high oil prices.
OPEC President Chakib Khelil said crude stocks were well within their five-year average and the 13-nation group was not inclined to either boost or reduce its current output of about 32 million barrels a day. "OPEC is concerned about the volatility of the market," Khelil, who is also Algeria's energy minister, said as the meeting opened. "Many factors are contributing to this volatility, including a weaker dollar, speculation (in crude markets) and the geopolitical situation."
Saudi Arabia, the No. 1 producer and by far the most influential member of the Organization of Petroleum Exporting Countries, also said it saw no reason to change output targets -- despite prices hovering near $100 a barrel and a rebuke by President Bush. "Understand the consequences of high energy prices," Bush said Tuesday after meeting with King Abdullah II of Jordan at the White House. "I think it's a mistake to have your biggest customers' economies slowing down as a result of higher energy prices," he added.
Bush's scolding underscored fears that high oil prices -- which earlier this week hit a new inflation-adjusted all-time record of nearly $104 a barrel -- are slowing global economic growth and risk nudging the shaky U.S. economy into recession.
Japan, the U.S. and other major industrialized nations have urged OPEC, which satisfies about 40 percent of the world's demand for crude, to bring more oil on the market as a means of pulling down prices.
But the group appeared to be resisting such a move, pointing to expectations of slackening demand in the second quarter and suggesting it would hold off to see what happens with supply and prices in coming months.
"Why do we need to take any new measure if the health of the market that we follow for our policies is sound?" the pan-Arab newspaper Al Hayat quoted Saudi Oil Minister Ali Naimi as saying. Naimi told reporters in Vienna that his country is pumping roughly 300,000 barrels a day over its quota and is selling every drop "day in, day out" -- an upbeat assessment. Analysts said they didn't expect any significant action Wednesday.
"In truth, OPEC's decision not to pump more oil is a reflection that supply is relatively good," said Anthony Sabino, a professor of business at St. John's University in New York. "What is driving oil prices up to the stratospheric level of over $100 per barrel is the U.S. economy, now undeniably in recession," he said. "It's not so much the price of oil is going up -- it's that the value of the U.S. dollar, sad to say, is slumping."
The 13 OPEC members are Algeria, Angola, Ecuador, Indonesia, Iran, Iraq, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, United Arab Emirates and Venezuela. Iraq is the only member not subject to the cartel's output quotas.
Oil Prices Rise Above $100
Oil prices moved back above $100 a barrel Wednesday after dropping sharply a day earlier on the possibility that OPEC will raise output and on expectations that U.S. crude supplies are continuing to rise. Speculators buying back into the market as prices dipped also were seen as another cause behind the rise.
Chakib Khelil, president of the Organization of Petroleum Exporting Countries, said the cartel is shying away from boosting production at Wednesday's meeting due to expectations that global demand for crude will fall during the second quarter.
Khelil's comment helped to halt the slide driven by investors betting the cartel will boost production to bring prices down on worries that high oil prices will help push the U.S. into a recession that would further cut demand for crude.
Light, sweet crude for April delivery on the New York Mercantile Exchange rose 83 cents to $100.35 a barrel in electronic trading by midday in Europe. The contract fell $2.93 to settle at $99.52 a barrel on Tuesday. It was crude's first move below $100 this week and its lowest settlement price since Feb. 25.
Prices were also pressured by expectations that U.S. crude inventories rose 2.3 million barrels last week, according to analysts surveyed by Dow Jones Newswires. The Energy Department's Energy Information Administration will issue its weekly inventory report on Wednesday.
EIA Administrator Guy Caruso on Tuesday predicted crude prices will fall to $57 a barrel by 2016 as exploration and development expands and brings new supplies to the market. Prices rose as high as $103.95 a barrel Monday, climbing past the $103.76 price many analysts consider to be the true record high for oil after the $38 per barrel price from 1980 is adjusted for inflation.
Analysts attribute much of the recent run-up in oil prices to speculative investors driven to the market by a weak dollar. Crude futures offer a hedge against it, and oil futures bought and sold in the greenback are more attractive to foreign investors when it is falling. This view of oil futures as a safe haven during turbulent times has recently rendered reports on inventories and demand moot.
Analyst Olivier Jakob of Petromatrix in Switzerland brushed off the relative stability of the U.S. dollar and the news from OPEC as the reasons behind the fall of crude oil prices on Tuesday. Rather, Jakob said, the fall had much more to do with speculators liquidating positions that were "pushed outside of stress-test limits by the recent buying frenzy on crude oil" and little connection to the actual availability of oil and oil-derived products.
"New money coming into commodities and into oil on the back of a weak dollar probably does not know what a 'crack' is," Jakob added. Crack spreads indicate the difference between the price of crude oil and the price at which the refined products are sold.
OPEC pronounced the global market for crude stable and sound as it opened a meeting Wednesday, signaling that the cartel is unlikely to tamper with current production despite record-high oil prices.
OPEC President Chakib Khelil said crude stocks were well within their five-year average and the 13-nation group was not inclined to either boost or reduce its current output of about 32 million barrels a day. "OPEC is concerned about the volatility of the market," Khelil, who is also Algeria's energy minister, said as the meeting opened. "Many factors are contributing to this volatility, including a weaker dollar, speculation (in crude markets) and the geopolitical situation."
Saudi Arabia, the No. 1 producer and by far the most influential member of the Organization of Petroleum Exporting Countries, also said it saw no reason to change output targets -- despite prices hovering near $100 a barrel and a rebuke by President Bush. "Understand the consequences of high energy prices," Bush said Tuesday after meeting with King Abdullah II of Jordan at the White House. "I think it's a mistake to have your biggest customers' economies slowing down as a result of higher energy prices," he added.
Bush's scolding underscored fears that high oil prices -- which earlier this week hit a new inflation-adjusted all-time record of nearly $104 a barrel -- are slowing global economic growth and risk nudging the shaky U.S. economy into recession.
Japan, the U.S. and other major industrialized nations have urged OPEC, which satisfies about 40 percent of the world's demand for crude, to bring more oil on the market as a means of pulling down prices.
But the group appeared to be resisting such a move, pointing to expectations of slackening demand in the second quarter and suggesting it would hold off to see what happens with supply and prices in coming months.
"Why do we need to take any new measure if the health of the market that we follow for our policies is sound?" the pan-Arab newspaper Al Hayat quoted Saudi Oil Minister Ali Naimi as saying. Naimi told reporters in Vienna that his country is pumping roughly 300,000 barrels a day over its quota and is selling every drop "day in, day out" -- an upbeat assessment. Analysts said they didn't expect any significant action Wednesday.
"In truth, OPEC's decision not to pump more oil is a reflection that supply is relatively good," said Anthony Sabino, a professor of business at St. John's University in New York. "What is driving oil prices up to the stratospheric level of over $100 per barrel is the U.S. economy, now undeniably in recession," he said. "It's not so much the price of oil is going up -- it's that the value of the U.S. dollar, sad to say, is slumping."
The 13 OPEC members are Algeria, Angola, Ecuador, Indonesia, Iran, Iraq, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, United Arab Emirates and Venezuela. Iraq is the only member not subject to the cartel's output quotas.
Oil Prices Rise Above $100
Oil prices moved back above $100 a barrel Wednesday after dropping sharply a day earlier on the possibility that OPEC will raise output and on expectations that U.S. crude supplies are continuing to rise. Speculators buying back into the market as prices dipped also were seen as another cause behind the rise.
Chakib Khelil, president of the Organization of Petroleum Exporting Countries, said the cartel is shying away from boosting production at Wednesday's meeting due to expectations that global demand for crude will fall during the second quarter.
Khelil's comment helped to halt the slide driven by investors betting the cartel will boost production to bring prices down on worries that high oil prices will help push the U.S. into a recession that would further cut demand for crude.
Light, sweet crude for April delivery on the New York Mercantile Exchange rose 83 cents to $100.35 a barrel in electronic trading by midday in Europe. The contract fell $2.93 to settle at $99.52 a barrel on Tuesday. It was crude's first move below $100 this week and its lowest settlement price since Feb. 25.
Prices were also pressured by expectations that U.S. crude inventories rose 2.3 million barrels last week, according to analysts surveyed by Dow Jones Newswires. The Energy Department's Energy Information Administration will issue its weekly inventory report on Wednesday.
EIA Administrator Guy Caruso on Tuesday predicted crude prices will fall to $57 a barrel by 2016 as exploration and development expands and brings new supplies to the market. Prices rose as high as $103.95 a barrel Monday, climbing past the $103.76 price many analysts consider to be the true record high for oil after the $38 per barrel price from 1980 is adjusted for inflation.
Analysts attribute much of the recent run-up in oil prices to speculative investors driven to the market by a weak dollar. Crude futures offer a hedge against it, and oil futures bought and sold in the greenback are more attractive to foreign investors when it is falling. This view of oil futures as a safe haven during turbulent times has recently rendered reports on inventories and demand moot.
Analyst Olivier Jakob of Petromatrix in Switzerland brushed off the relative stability of the U.S. dollar and the news from OPEC as the reasons behind the fall of crude oil prices on Tuesday. Rather, Jakob said, the fall had much more to do with speculators liquidating positions that were "pushed outside of stress-test limits by the recent buying frenzy on crude oil" and little connection to the actual availability of oil and oil-derived products.
"New money coming into commodities and into oil on the back of a weak dollar probably does not know what a 'crack' is," Jakob added. Crack spreads indicate the difference between the price of crude oil and the price at which the refined products are sold.
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