March 17 (Bloomberg) — Crude oil rose to a record $56.69 a barrel as a promise of increased output from OPEC failed to ease concern that demand for fuels is rising faster than supply.
The Organization of Petroleum Exporting Countries, which is already pumping near capacity, said yesterday’s agreement to raise the group’s output quota by 500,000 barrels a day won’t immediately increase supply. U.S. gasoline prices rose to a record after the government reported stockpiles had their biggest decline since September.
“I don’t think OPEC’s decision is going to be enough to change peoples’ perception,” said Alan Herbst, a principal at New York-based Utilis Energy LLC, an energy adviser. “Unless there’s a worldwide economic downturn, demand is going to increase.”
Crude oil for April rose as much as 23 cents, or 0.4 percent, in after-hours electronic trading on the New York Mercantile Exchange, to the highest intraday price since the contract was introduced in 1983. It was at $56.50 at 11:48 a.m. Singapore time.
Yesterday, the April contract rose $1.41, or 2.6 percent, to $56.46 a barrel, a record closing price.
Record-high prices turned PetroChina Co., the nation’s biggest oil producer, into Asia’s most profitable company in the six months ended December, ahead of Toyota Motor Corp.
Asian stocks fell on concern higher energy costs will leave consumers with less to spend after oil prices rose. Samsung Electronics Co. and Toyota Motor led declines. The Morgan Stanley Capital International Asia-Pacific Index, which tracks more than 900 companies, lost 0.5 percent to 103.73 at 11:20 a.m. in Tokyo.
OPEC will hold talks on another 500,000 barrels a day increase in the output quota starting from May 1, OPEC President Sheikh Ahmad Fahd al-Sabah told reporters in Isfahan, Iran, where the group met yesterday.
Because members are already supplying more than planned, additional barrels may not come until May, he said.
“There is little OPEC can do to get more on the market,” said John Kilduff, senior vice president of energy risk management with Fimat USA in New York. “OPEC has ended up marginalizing themselves. The increase in quotas only highlights their lack of spare capacity.”
In New York yesterday, crude oil futures jumped more than $1.50 in 15 minutes after the Energy Department’s weekly report showed U.S. gasoline supplies fell by 2.9 million barrels last week, almost three times the decline expected by analysts in a Bloomberg survey.
Gasoline supplies fell for a second week to 221.4 million barrels, the report showed. Supplies remained 9.4 percent higher than a year earlier.
“It was the gasoline number that spooked the market,” said David Thurtell, commodity strategist at Commonwealth Bank of Australia in Sydney.
Gasoline for April delivery rose 4.1 cents, or 2.7 percent, to $1.5483 a gallon in New York, the highest closing price since the contract was introduced in 1984. It was at $1.5505 in after- hours trading.
U.S. crude-oil supplies gained 2.6 million barrels to 305.2 million last week, the highest since June, and 8.2 percent higher than a year earlier, according to Energy Department data. Analysts surveyed by Bloomberg forecast a 2 million barrel gain.
“`U.S. crude supplies rose last week but with the growth of China, there’s going to be more competition for barrels in the months ahead,” said Phil Flynn, vice president of risk management with Alaron Trading Corp. in Chicago. `We’re worried about the high-demand period this summer and our ability to keep up with gasoline consumption.”
China’s fuel use will rise 7.9 percent this year, or 500,000 barrels a day, to 6.88 million barrels a day, according to the Paris-based International Energy Agency. China is the biggest oil consumer after the U.S.
Global supply is sufficient to boost inventories now, Saudi Oil Minister Ali al-Naimi said yesterday in Isfahan.
“When we project into the fourth quarter, we see a substantial rise between the third quarter and the fourth,” he said. “We believe additional crude is needed. How much, we don’t know.”
OPEC pumped 29.85 million barrels of oil a day in February, according to a Bloomberg survey of oil companies, producers and analysts. The 10 members with quotas, all except Iraq, have a production ceiling of 27 million barrels a day and exceeded that by almost a million barrels last month.
Non-OPEC oil producers are mostly pumping at capacity as well. Norway, the third-largest oil exporter behind Saudi Arabia and Russia, has little scope to boost production, Norwegian Prime Minister Kjell Magne Bondevik said today in Canberra, Australia, where he met with Prime Minister John Howard.
“Our potential for increasing production is very limited,” Bondevik told reporters.
The International Energy Agency, an adviser on energy policy to 26 industrialized nations, forecast in a report last week that oil consumption will climb by 1.81 million barrels, or 2.2 percent, to 84.3 million barrels a day this year. It was 330,000 barrels more than the agency forecast last month.
Prices rose in 1974 after an oil embargo that followed the Arab-Israeli war and from 1979 through 1981 after Iran cut oil exports. The average cost of oil used by U.S. refiners was $35.24 a barrel in 1981, according to the Energy Department, or $75.71 in today’s dollars.