OPEC Increases Production Cap But Market Drives Oil Price Up
By Jad Mouawad
THE NEW YORK TIMES
OPEC delegates said Monday that the group planned to allow its members to provide up to 2 million barrels a day of extra crude oil “if the market needs it.” But oil traders brushed aside the move and instead sent oil prices higher on worries of another possible hurricane.
Royal Dutch Shell, Chevron and other oil companies said they were evacuating some employees from offshore oil platforms in anticipation of the storm, which the National Hurricane Center said Monday was making its way toward the Gulf of Mexico and could become a hurricane overnight.
The latest hurricane warnings helped push oil prices up on the New York Mercantile Exchange, and they closed Monday at $67.39 a barrel, up $4.39. Natural gas futures hit a record on Monday, closing at $12.663 per thousand cubic feet, up $1.519.
Forecasters issued a hurricane warning for parts of Southern Florida and said that by early Saturday, the storm, the 17th named storm of the Atlantic hurricane season, could make landfall on the Texas coast near Houston, an area that is home to many refineries and petrochemical plants and a major port.
The mayor of Galveston, Lyda Ann Thomas, called for a voluntary evacuation. Galveston is an island city and tourist destination about 50 miles southeast of Houston.
OPEC’s highly unusual decision to put on call an extra 7 percent of its production is expected to be formally announced Tuesday at the end of the group’s two-day meeting in Vienna. Some oil ministers said the Organization of the Petroleum Exporting Countries wanted to show it was doing all it could to help lower oil prices even as they blamed refining shortages for the current situation. Under the proposal, which members have been discussing in meetings since Sunday, OPEC producers would provide as much oil as refiners and other buyers asked for, without regard to previous production limits or quotas. The production ceiling, now set at 28 million barrels a day and shared by all 11 members except Iraq, would theoretically remain unchanged.
“The crude is available,” Ali Naimi, Saudi Arabia’s oil minister, and OPEC’s most influential voice, told reporters in Vienna. “If you want it, here it is.”
OPEC’s plan, proposed by Sheik Ahmed Fahad Al-Ahmed Al-Sabah, the group’s current president and the oil minister from Kuwait, has the backing of Saudi Arabia, OPEC’s largest producer.