OPEC Influx May Send Crude Oil Futures Lower
New York crude oil futures may fall this week as surging imports from the Organization of the Petroleum Exporting Countries boost U.S. inventories, according to a Bloomberg survey of traders and analysts.
Twenty-three of 49 respondents in the survey, or 47%, predicted that oil futures would drop. Fourteen said prices would rise; 12 expected little change.
The 10 members of OPEC with quotas, all except Iraq, decided last month to raise their output quota by 2 million barrels to 25.5 million barrels a day as of last Thursday, and by a further 500,000 barrels a day Aug. 1. Saudi Arabia and Nigeria signaled last week that the August increase may be unnecessary. OPEC pumps about one-third of the world’s oil.
“Fundamentals are for weaker crude prices in the coming week -- I think we could lose a dollar pretty easily,” said Kurt Barrow, a Singapore-based energy consultant at Purvin & Gertz Inc. Violence in Iraq and Saudi Arabia “is the wild card.”
Crude oil for August delivery rose 2.2% last week but at the end slid 35 cents to $38.39 a barrel on the New York Mercantile Exchange. Futures are down 9.6% from an all-time high of $42.45 on June 2.
OPEC will meet in Vienna on July 21, at which time it will be too late to decide on output in August, OPEC President Purnomo Yusgiantoro said. The group will discuss September’s production level, he said.
“Even if OPEC decides against the additional 500,000 barrels, supplies are ample and should remain in pretty good shape for the foreseeable future,” said Marshall Steeves, an analyst with Refco Group in New York.
Weekend attacks in Saudi Arabia and Iraq have caused prices to soar three times since late April. The two countries hold about one-third of the world’s proved oil reserves.
“On the bullish side, there’s the potential for the terrorist threat to reach Iraqi and Saudi oil facilities,” said Tony Machacek, a broker with Prudential-Bache International Ltd. in London. OPEC is “producing pretty much at capacity, and if there are disruptions to supplies, like a bomb in Iraq, prices may rise quickly.”
Iraqi oil exports slumped to a seven-month low in June after sabotage to two southern pipelines cut shipments to terminals in the Persian Gulf.
From Bloomberg News
