OPEC Raises Quota; Not Much More Oil May Flow
The Organization of the Petroleum Exporting Countries agreed on Thursday to increase its production quotas by two million barrels a day, or 8.5 percent, effective July 1. Industry experts gathered here for OPEC's meeting said that the decision sent a tepid message to oil markets about the group's commitment to lowering prices, which have been around $40 a barrel.
Traders responded to the news by bidding up the futures price of oil almost 70 cents a barrel on the New York Mercantile Exchange, but prices dropped later in the day when new Energy Department statistics showed growing supplies of oil, gasoline and other distilled fuels in the United States. Crude oil for July delivery settled in New York at $39.28 a barrel, down 68 cents from Wednesday.
Analysts said the problem with OPEC's move was that it would not add any new oil to the market. As a group, OPEC is already overproducing its declared ceiling of 23.5 million barrels a day, set in March, by at least 2 million barrels. Increasing the quota merely legitimizes what is already happening, they said.
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