OPEC: Quotas "Obsolete"
May 10 (Bloomberg) -- Crude oil gained for a fifth day on speculation demand will grow faster than the Organization of Petroleum Exporting Countries can pump oil.
Global demand is expected to surge in the second half of the year as refiners stockpile crude before the northern hemisphere winter. OPEC, the source of about 40 percent of the world's oil, is letting inventories accumulate by ignoring its own output quotas, which are ``now obsolete,'' the group's President, Sheikh Ahmad Fahd al-Sabah, said yesterday, the Kuwait News Agency reported.
``OPEC is being remarkably flexible,'' said Deborah White, a commodities economist at Societe Generale in Paris. ``When they in fact believe that demand has outstripped their production capacity, they set aside quotas and pump as much as they can.'' White expects oil to reach $60 a barrel this year.
Crude oil for June delivery climbed as much as 52 cents, or 1 percent, to $52.55 a barrel on the New York Mercantile Exchange, the highest since April 27. It was up 26 cents at $52.29 at 9:12 a.m. London time, gaining 34 percent from a year ago. Prices reached a record $58.28 on April 4.
Brent crude for June settlement added 28 cents, or 0.6 percent, to $51.57 on London's International Petroleum Exchange.
OPEC pumped 30.07 million barrels a day in April, the highest level this year, Bloomberg data shows. Its output reached 30.5 million barrels a day in October, a 25-year high.
``We still have a very tight demand and supply situation and there's not very much spare capacity,'' said Simon Wardell, an analyst at Global Insight Inc. in London. ``Everybody is happy buying stocks now and sitting on them for a while. With gloomier economic news, people may reconsider whether the fourth-quarter demand surge will be as big as expected.''
Saudi Arabia's state-owned oil producer, Saudi Aramco, has told customers in Asia it will supply them for a second straight month the entire volume of crude oil agreed in annual contracts, according to refinery officials who asked not to be identified.
Global demand will rise 2.1 percent this year, with most of the increase in China and the U.S., the International Energy Agency, an adviser on energy to 26 industrialized nations, said last month. Demand will peak in the fourth quarter at 86.1 million barrels a day, the Paris-based agency said.