Oil prices mixed as market eyes Saudi output hike

13th June 2011, Comments 0 comments

Oil prices diverged within tight ranges on Monday as the market anticipated that Saudi Arabia would ignore OPEC and raise its crude output to meet Asian demand, analysts said.

New York's main contract, light sweet crude for delivery in July, dipped 27 cents to $99.02 a barrel.

Brent North Sea crude for July edged up eight cents to $118.86 per barrel in early London trade.

"Oil is... primarily reacting to expectations that Saudi Arabia will raise output and supply more oil to Asia," said Victor Shum, an analyst at Purvin and Gertz international energy consultancy.

Last week, the 12-nation Organization of Petroleum Exporting Countries failed to agree on raising its official oil output quota.

Riyadh pushed to raise production to moderate price increases was rebuffed by Iran and its allies, who successfully lobbied to keep official output steady at 24.84 million barrels per day.

Saudi Arabia is worried that steady output will result in higher oil prices for consumers, harming the global economic recovery.

Filip Petersson, an analyst at SEB Commodity Research, said all the indications nevertheless pointed to a hike in output by Saudia Arabia.

"The Saudi Arabian newspaper al-Hayat cited anonymous sources saying that crude production could exceed 10 million barrels a day next month.

"Since the newspaper is more or less state controlled and there was no official denial this was a strong indication that the country will go for raised production with or without the rest of OPEC," Petersson noted.

Saudi Arabia's official quota is 8.05 million barrels a day but the International Energy Agency estimates that it is already producing above that amount, at 8.8 million barrels daily.

OPEC said on Friday in a regular report that it expected global oil demand to increase by 1.6 percent to 88.14 million barrels per day in 2011, slightly lower than its previous forecast.

However, it added: "A volatile oil market is making future oil demand estimates hard to manage."


© 2011 AFP

0 Comments To This Article