OPEC announced a kick up in oil production yesterday as oil prices hover around $51 a barrel. The 500,000 bpd increase marks the second increase in two months when OPEC minister met last month and increased production 500,000.
These two increases will take official production levels to 28 million bpd although the Qatar newspaper Gulf Times reports almost all OPEC members have been producing well in excess of the official ceiling and has been above 28 million bpd for some time.
“In May, there’ll be an increase in production, because (growth in) demand in the third quarter will dictate an increase in production,” OPEC president Sheikh Ahmed Fahd al-Sabah, who is also Kuwait’s oil minister, told reporters in parliament.
Light sweet crude is priced at $50.70 a barrel, up 21 cents for delivery in May. Brent North Sea Crude dropped 71 cents to $50.90 a barrel.
Several factors influence the recent drops in prices according to Societe Generale analyst Frederic Lasserre. He said slowing demand in China and the U.S. rising inventories as well as OPEC increasing production and a rally in the dollar played a part in the price drops.
Markets also watch Iraq as insurgents attacked oil pipelines out of the Kirkuk oil fields. Iraqi guerillas have continued to hammer the pipelines and other parts of the Iraqi infrastructure since the U.S. invaded in 2003. The pipelines run to refineries in Baiji and are then piped to Turkey. For the last four months, nothing’s moved though because of the attacks.
John Stith is a staff writer for Murdok covering technology and business.
