Light sweet crude took off this morning amid news of OPEC raising official tallies for oil production by 500,000 barrels a day. This did little to calm traders though as OPEC has been running above stated quotas essentially no production capacity left. This news was also expected.
Light sweet crude took off this morning amid news of OPEC raising official tallies for oil production by 500,000 barrels a day. This did little to calm traders though as OPEC has been running above stated quotas essentially no production capacity left. This news was also expected.
Prices were 70 cents this morning to $55.70 in New York and the markets await the EIA report this morning on current stocks of U.S. inventories. They report is due out at 10:30 p.m.
Last week, the EIA report surprised many industry experts. Expectations were that crude oil and gasoline inventories were expected to rise slightly. Instead, crude and gas supplies went down and distillates went up much more than expected.
OPEC announced this morning they would officially raise production capacity 500,000 barrels a day to a total of 28 million barrels. OPEC maintains however that oil is bottlenecked at refineries and that crude levels are fine.
Demand for OPEC product is expected to increase as the 4th quarter approaches, particularly distillates that include jet fuel, diesel, and heating oil. Normally, demand for these diesel and heating oil drops in the spring and summer, but demands remains high this year.
The only nation with any real capacity left right now is Saudi. The problems with Saudi’s additional capacity are that it is what is termed as heavy and sour crudes. These grades of oil require a more costly and complicated refining process to turn them into products for market.
John Stith is a staff writer for Murdok covering technology and business.
