OPEC Agrees to Boost Crude Oil Output

by merrie | September 11, 2007 at 06:18 pm

237 views | 0 Recommendations | 0 comments

Abdalla Salem El-Badri, OPEC's secretary general, in an astute
decision to loosen OPEC's taps, based in part on the effects of the
crisis in the U.S. subprime mortgage market, has agreed to boost crude
production by 500,000 barrels a day. The effects of the crisis in the
U.S. subprime mortgage market has sent ripples across all sectors of
the economy, including the
energy market. With the raising fears of a U.S. recession may
result in reduced demand
for oil and gasoline.

"We have seen the financial markets and the subprime mortgage (crisis) putting some clouds on the horizon," he said.

After OPEC's announcement, light, sweet crude for October delivery immediately advanced above $78 a barrel on the New York Mercantile Exchange. By the end of an up and down session, it rose 74 cents to settle at $78.23 a barrel, besting the previous record, set July 31, by 2 cents.

In London, October Brent crude gained 23 cents to $75.71 a barrel on the ICE Futures exchange.

"The fact that they're actually adding oil is very, very positive," said John Hall, an analyst with John Hall Associates in London.

Hall noted that prices have more than doubled in just 2 1/2 years. Crude hit an intraday record of $78.77 a barrel in early August on the Nymex, and prices since have been holding fairly steadily above $76.

But Simon Wardell, a senior energy consultant with Global Insight, said high crude costs may be here to stay.