Oil Prices Rise 3% on Reduced Output by OPEC Members
Oil prices jumped almost 3% on Friday as a report showed OPEC producers fulfilling their pledge to cut back supply this month.
Crude oil for July delivery rose 86 cents to $30.82 a barrel on the New York Mercantile Exchange. Oil has declined 4.8% since June 11.
Prices rose as tanker-tracking consultant Petrologistics told clients that the world’s top oil supplier, Saudi Arabia, cut output this month by 12%. Gulf allies Kuwait and the United Arab Emirates followed the Saudi move, helping to bring OPEC output down to 25.76 million barrels a day in June.
Strong crude oil imports have begun to rebuild U.S. inventories, which are 10% below last year’s level. The U.S. government Wednesday reported a weekly increase of 4 million barrels in crude oil stockpiles.
“The Petrologistics estimates mean we may see crude imports tapering off, if OPEC production indeed starts falling off, and that has sparked concern that supplies may tighten again,” said Phil Flynn, market analyst at Alaron Trading in Chicago.
Last week the Organization of the Petroleum Exporting Countries opted to maintain its current ceiling until another emergency meeting July 31, when it hopes to have a clearer picture of Iraq’s production.
Iraq said this week that production by mid-July would be only 1 million to 1.2 million barrels a day because of continued looting and technical snags.
Baghdad will ship its first post-war crude this weekend, after auctioning off some 10 million barrels held in storage, but the prospect for sustained exports remains uncertain.
