OPEC considers December oil output boost

OPEC could intervene to boost oil output in December from it’s member countries if oil prices were to reach $100 a barrel, according to the group’s president and Kuwait’s oil minister.

Analysts have been speculating about whether or not oil prices would again breach $100 a barrel. The price of light, sweet crude for December delivery rose 76 cents, or 0.97% Tuesday to settle at $79.44 a barrel on the NYMEX. Oil prices have surged about 140% from their February lows, soaring as high as $82 a barrel last week.

While the global economy has shown signs of recovery, the recent price surge has not been the result of fundamentals. Data due after the close and on Wednesday is expected to show a build of 900,000 barrels in US commercial crude stocks for the week ended Oct. 23, according to analysts polled by Platts. Oil stocks in developed countries are enough to meet demand for 61 days, a level well above their five-year average.

Of course, not every OPEC member supports a production increase. With 61 days of oil in reserve, inventories are substantially above the 55-day level OPEC would like to reach before increasing supply.

“Under current conditions requesting OPEC to increase its crude output in order to decrease the oil price would be improper,” Iran’s OPEC governor, Mohammad Ali Khatibi, told the Islamic Republic News Agency (IRNA).

Iran, along with Venezuela have traditionally argued on behalf of higher prices, but in this case many analysts believe Khatibi has a point: Oil supply isn’t the problem.

Tags:  December, oil output, OPEC