Oil up, OPEC says pumping near full tilt
Reuters | May 9, 2005
LONDON - Oil prices held above $51 on Monday and OPEC's president said the cartel will ck last month, even though OPEC producers have ramped up output to build a cushion of oil stocks ahead of an expected fourth quarter demand surge.
"I think now we are dealing with the production without the quotas," said Kuwaiti oil minister Sheikh Ahmad al-Fahd al-Sabah, also OPEC President.
Robust demand growth in the United States and China has helped propel prices to record highs, despite fears that higher energy costs will ultimately undermine economic growth.
Only Saudi Arabia now holds significant spare production capacity. Saudi officials said the kingdom last month pumped just over 9.5 million barrels per day (bpd) -- leaving spare capacity of 1.5 million bpd.
Kuwait's `Crude stocks will probably keep building until the refineries increase runs to produce more gasoline for the summer driving season by the end of May," said Tony Nunan of Mistubish Corp in Tokyo.
OPEC, which controls half the world's crude exports, meets again on June 15 in Vienna to chart production strategy for the second half of the year.
Supply growth in other parts of the world have fallen below expectations in part because a surge in Russian output has tailed off.
Algeria's oil minister Chakib Khelil said at the weekend that even if OPEC pumps at full capacity it may not be able to meet strong fourth quarter demand without sufficient inventories being built up beforehand.
"What you need to do is raise stocks in the third quarter to accumulate enough of them in the third quarter that you can deplete stocks and maintain a high level of production for the fourth quarter," Khelil told Reuters.