Crude futures slipped on Monday, as oil cartel Organisation of Petroleum Exporting Countries (Opec) announced it will further increase output by half a million barrels daily from next month to help meet an anticipated demand surge in the second half of the year.
Light, sweet crude for the May contract on the New York Mercantile Exchange fell 17 cents to $53,15 a barrel, late afternoon in Asia. Heating oil prices fell marginally to $1,4914 a gallon (3,8 litres).
”Kuwait believes that the increase in production is still possible and may come in May due to the expected rise in demand by about one million barrels per day in the third quarter,” Opec president Sheikh Ahmad al-Fahd al-Sabah, also Kuwait’s Oil Minister, said on Sunday.
Qatari Oil Minister Abdullah al-Attiyah also said at the weekend that a second output increase ahead of the cartel’s June 15 meeting is still possible. Recently, the 11-member cartel has been trying to counter frequent price surges and a jittery market with announcements of production increases.
Demand is expected to rise in the third quarter due to the onset of the summer driving season in the United States, the world’s biggest crude-oil consumer.
Last week, the US Energy Department said the nation’s inventory of crude oil grew by 2,4-million barrels to 317,1-million barrels, or 8% higher than last year.
Opec raised output limits by 500 000 barrels per day in March to 27,5-million barrels per day in a bid to cool prices. It left room for a second increase of 500 000 barrels per day before a June meeting if prices failed to drop below $55. The group began talks on the second rise last weekend and said then it could decide within two weeks.
Oil analyst Peter Kemp in London told the Energy Intelligence website on Monday that despite a five-day price slide last week, it’s ”seriously premature” to predict a burst in the oil bubble anytime soon.
”Prices are volatile but still well above $50 on both sides of the Atlantic,” said Kemp, according to the website. ”The slight slippage of recent days was more of a reality check than a correction, in recognition of the build in inventories that will occur in the second quarter.” — Sapa-AP