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Thursday, September 16, 2004 - Page updated at 12:00 A.M.
OPEC takes symbolic action on oil target
By MATT MOORE
The decision was a consensus of the 11 members of the group and will take effect Nov. 1, said Indonesia's Purnomo Yusgiantoro, president of the Organization of Petroleum Exporting Countries.
"It's a gesture of goodwill to the consumers that we want lower prices," Algerian Oil Minister Chakib Khelil said.
OPEC will raise its self-imposed output limit for all its members, except Iraq, from 26 million barrels a day to 27 million barrels. But the cartel, which accounts for one-third of the world's oil supply, is already producing 27.4 million barrels a day.
"It's a PR exercise to prove to the consumer that OPEC actually likes them," said Leo Drollas, chief economist at the London-based Center for Global Energy Studies. "It's not going to help the market at all."
"OPEC's decision ... has no meaningful significance that I can see," said Todd Hultman, president of Dailyfutures.com, a commodity information provider.
Crude prices in New York and London climbed to record highs earlier this summer, but have eased in recent weeks. Yesterday U.S. crude futures fell 81 cents to settle at $43.58 a barrel in New York.
Oil slid in the last hour of trading yesterday as it appeared Hurricane Ivan's track toward Mobile on the Alabama coast may avoid most platforms in the Gulf of Mexico, where 78 percent of oil output has been shut. Oil earlier rose as much as 2.1 percent after a report showed U.S. crude-oil supplies last week fell more than expected.
Some countries, including Nigeria and Libya, had sought an increase in the price band for its basket of crudes, currently at $22 to $28, along with the higher production targets.
Prices have long been well above the upper end of the band, which is the cartel's preferred selling range. OPEC's basket price, currently in the $39 a barrel range, is lower than prices in the U.S. because that market requires a higher grade of product.
Purnomo said the consensus by OPEC members was to wait until a Dec. 10 meeting in Cairo, Egypt, to make a decision. He did not say why when asked.
Material from CBS MarketWatch and Bloomberg News is used in this report.
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