The way oil markets really work

Daru Rateau darurateau at
Thu Aug 21 02:55:28 MDT 2003


Investment funds built up record positions in oil futures early in August as an alternative to poor-performing equities and bonds. Barclays said any further unwinding of this position could herald further declines in oil.

The sell-off sent OPEC's reference price below $28 per barrel and has taken the pressure off the cartel to raise production.

Having spent 12 days above OPEC's $22 to $28 per barrel target range, OPEC's export basket price fell to $27.94 per barrel on Tuesday, OPEC said.

The Organization of the Petroleum Exporting Countries is now less likely to raise quotas because its price target mechanism stipulates that the price must stay above $28 for 20 days before an increase is triggered.

Despite the high prices, OPEC officials had poured cold water on the idea of increasing production, arguing that consumers were well supplied and prices were reacting to external factors such as uncertainty in Iraq.

OPEC ministers meet again on Sept. 24 to set output policy.


Short article in full

Oil Output Boom Set to Continue

Reuters The country's crude oil output will grow steadily in the second half of the year, the Energy Ministry said Wednesday, as oil majors invest more in production spurred by high oil prices.

The ministry said in a statement that Russia would produce at least 208.8 million metric tons (8.31 million barrels per day) in July-December 2003 compared with 202.4 million tons (8.20 million bpd) in January-June of 2003.

Russia's oil production is booming for the fifth straight year and the biggest producer outside OPEC is closing in on the levels of output in Saudi Arabia, the world's top oil producer.

The country is also the world's second largest oil exporter after Saudi Arabia, shipping around 4 million bpd to international markets.

The statement also said that if the figure of 208.8 million tons were achieved in the second half it would represent a 5.7 percent growth year on year. It also said gas production in Russia was set to rise by 2.7 percent year-on-year in the second half to reach 300.4 billion cubic meters.

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