OPEC agrees to increase of 2.0 million barrels per day

[Stephanie]

Extra
OPEC opens taps; crude prices dive


Increase in production ceiling by 2 million barrels a day is less than hoped, but move has desired effect. One analyst says prices could fall $5 a barrel.

By Andrew Mitchell and Khaled Oweis, Reuters

OPEC on Thursday agreed to raise output by 2 million barrels a day from July, at the bottom end of expectations, but made the intended effect: oil prices sank. In a two-stage pact the 11-member Organization of the Petroleum Exporting Countries, meeting in Beirut, promised to add a further 500,000 barrels a day from Aug. 1.

"It will send a very, very strong signal to the market,'' said Saudi Arabian Oil Minister Ali al-Naimi. He said the extra August increment was not negotiable on the downside and could even be altered higher.

"It's a good agreement, we will be able to test the impact of the policy on the oil market before we meet again in July,'' said Qatari Oil Minister Abdullah al-Attiyah. OPEC meets again on July 21.

OPEC has been under enormous pressure from consumer countries worried about the impact of inflated energy costs on economic growth. For their own part producers do not want prices at heights that put fuel demand at risk. Point. Click. Pay.
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At first sight, Thursday's deal lifting group limits by 8%, to 25.5 million barrels daily from July 1, was a disappointment for those expecting OPEC to deliver more immediately.

But oil prices fell on the view that OPEC's core Gulf producers are serious about cheaper oil. By 2 p.m. EDT, U.S. crude was off $1.31 a barrel at $38.65.

"This is the first time in two years that OPEC has set quotas at a level that reflects underlining forward demand for their oil,'' said Marshall Hall of London's Energy Market Consultants.

"We think prices could come off $5 a barrel in 30 days because the Saudis, the Kuwaitis and the Emiratis will produce enough to ensure prices go down.''


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U.S. oil has been around the $40 mark for the past three weeks, fueled by demand growth and worries about supply security in the Middle East.

U.S. applauds
The United States lauded the agreement, saying sufficient supplies were critical to sustaining economic growth.

"This welcome action demonstrates that producers are taking concrete and immediate steps to address the global oil supply needs,'' said White House spokesman Claire Buchan.

Delegates said the pact was a compromise between Saudi Arabia and countries like Iran and Venezuela which feared a Saudi proposal for an immediate 2.5 million increment could trigger a big price collapse.

But the official details will make little difference to actual supplies from the cartel that controls more than half the world's oil exports.

That's because group output already is at official new quota limits.

"For supply into the market, it's irrelevant,'' said Roger Diwan of Washington's PFC Energy consultancy.

Regardless of official allocations, Saudi Arabia and the United Arab Emirates confirmed to reporters they would deliver about a million barrels daily of real extra oil in June.

The two countries are OPEC's only members with much spare capacity.

Saudi's Naimi reiterated that Riyadh was pumping 9.1 million barrels a day, an addition of about 700,000 barrels per day. The UAE is adding 400,000 barrels a day.

Every dollar increase in a barrel of crude translates into 2.4 cents at the gas pump.

[rainstorm]

good news, but i dont think it is important. at these prices they are going to pump as much as they can as fast as they. i expect a glut to develop soon.

[Lindaloo]

My thinking is OPEC did this to get the prices up anyway. When the prices drop they will be exactly where OPEC wanted them to be to begin with.

[Stephanie]

I hope that it makes some kind of difference in the prices at the pumps. I'm not dilusional to think that it'll go down in proportion to how fast it went up.

What you said makes sense Lindaloo.

[Derek Ortt]

It wont. All that will happen is that everyone will revert back to buying SUV's and using their gas guzzling vehicles even more. In fact, I would not be surprised to see prices actually <b>INCREASE</b> as a result of this due to demand outpacing production. One point to consider, production has increased from last yera, yet demand has also increased

[Lindaloo]

It wont. All that will happen is that everyone will revert back to buying SUV's and using their gas guzzling vehicles even more. In fact, I would not be surprised to see prices actually <b>INCREASE</b> as a result of this due to demand outpacing production. One point to consider, production has increased from last yera, yet demand has also increased

I purchased an SUV because I have children and it is more convenient to travel with them. What do you suggest we parents with children who vacation every summer purchase? A Ford Focus? Guess I could strap the moaning and groaning kids to the roof.

[Brent]

Don't kill me...

Please

We Americans(and everyone else in the World) have just proved we'll pay any price for gasoline. Why should it go down?

[Lindaloo]

Don't kill me...

Please

We Americans(and everyone else in the World) have just proved we'll pay any price for gasoline. Why should it go down?

[Brent]

Don't kill me...

Please

We Americans(and everyone else in the World) have just proved we'll pay any price for gasoline. Why should it go down?

LOL!

I hope it goes down as much as anybody. It's dropped 2 cents here since the Weekend. That might not sound like much, but at least it's not going up 5 cents every other day like it had been.

[rainstorm]

Don't kill me...

Please

We Americans(and everyone else in the World) have just proved we'll pay any price for gasoline. Why should it go down?

basic economics

[george_r_1961]

It may drop SLIGHTLY...or the prices may not drop at all. Brent had a point. The oil companies are gonna charge as much as they know people will pay. Corporate greed

[Guest]

It wont. All that will happen is that everyone will revert back to buying SUV's and using their gas guzzling vehicles even more. In fact, I would not be surprised to see prices actually <b>INCREASE</b> as a result of this due to demand outpacing production. One point to consider, production has increased from last yera, yet demand has also increased

I purchased an SUV because I have children and it is more convenient to travel with them. What do you suggest we parents with children who vacation every summer purchase? A Ford Focus? Guess I could strap the moaning and groaning kids to the roof.

Thats why they have mini vans! lol

I think you made a good point as well about them getting the prices they wanted in the end! Which unlike some i dont forget what i was paying at the pump before all this hijacking started!

So ALL lets not forget what we were paying before they got greedy which was around 1.30 or so (Where i lived at anyways)

[rainstorm]

It may drop SLIGHTLY...or the prices may not drop at all. Brent had a point. The oil companies are gonna charge as much as they know people will pay. Corporate greed

what corporate greed?

[Brent]

It wont. All that will happen is that everyone will revert back to buying SUV's and using their gas guzzling vehicles even more. In fact, I would not be surprised to see prices actually <b>INCREASE</b> as a result of this due to demand outpacing production. One point to consider, production has increased from last yera, yet demand has also increased

I purchased an SUV because I have children and it is more convenient to travel with them. What do you suggest we parents with children who vacation every summer purchase? A Ford Focus? Guess I could strap the moaning and groaning kids to the roof.

I guess you could. J/K

There's got to be a more gas-efficent large vehicle.

[Amanzi]

I purchased an SUV because I have children and it is more convenient to travel with them. What do you suggest we parents with children who vacation every summer purchase? A Ford Focus? Guess I could strap the moaning and groaning kids to the roof.

Oh girl, you hit the nail on the head. I used to have a geo storm, untill I had my daughter.. No joke going grocery shopping with 2 car seats and a hatch-back trunk thats smaller than my hand-bag! Ive had the urge to strap a few screaming kids onto the roof myself I had to get a SUV, just to stay sane!!!!!!!!!

[Rainband]

The fact is our current administration needs to put pressure on OPEC and force the prices down. I know Bush can do it!!!!

[vbhoutex]

I got my SUV because it floods enough here in Houston(street flooding)that it is almost a need to be able to get around sometimes. Past that I needed something I could "haul" things in and wanted something that would carry more than 3 people(a pick-up, the "car" of choice in TX!). Of course I wasn't planning on having to rob a bank everytime I fill up either!!

[Lindaloo]

LOL Bron!!

I just had to fill up that SUV the other day to a whopping tune of 70 bucks. Yes, you heard that right, 70 bucks! I try to keep all my gas tanks full during hurricane season. I should just leave it here and hope a tree takes it out. LOL!! j/k.

[Brent]

LOL Bron!!

I just had to fill up that SUV the other day to a whopping tune of 70 bucks. Yes, you heard that right, 70 bucks! I try to keep all my gas tanks full during hurricane season. I should just leave it here and hope a tree takes it out. LOL!! j/k.

HAHA!

70 bucks?

[Pburgh]

Geez, are you tellin me that those luggage racks aren't to store the kids??????? Well I'll be darned. I thought that's why they put them up there. Ya learn something everyday.