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| April 28, 2003 | Monday | Safar 25, 1424 |
World commodity report
At a recent Opec meeting in Vienna, members agreed to reduce output by 2 million barrels a day from June and might even reduce production further. The cut in Opec’s current production level of 27.4 million bpd to 25.4 million bpd as of June 1 effectively creates a new quota for the Organisation of Petroleum Exporting Countries of 25.4 million bpd, Qatar Oil Minister and Opec President Abdullah bin Hamd al-Attiyah told a news conference after the cartel’s one-day meeting in Vienna.
The new output level was an increase over the current quota of 24.5 million bpd, which Opec states have not respected as they flooded the market with oil to keep prices under control when the Iraq war loomed earlier this year.
The price of benchmark Brent North Sea crude oil for June delivery fell 66 cents per barrel to $23.60 in late trading in the wake of the announcement, the lowest level since mid-November.
By mid April oil prices which had spent the best part of last year, swinging widely, are settling down into a comfortable range. Oil prices had fallen on April 14, on reports that Iraq’s Kirkuk oilfields could restart production within weeks. The oilfields in northern Iraq are capable of producing up to 900,000 barrels per day of Iraq’s pre-war production of about 2.5 million bpd. A return of Iraqi crude, which was halted when war started on March 20, would come as Opec was considering output cuts. However, the timing of the return of Iraq oil depends on decisions made by a new political administration about oil exports.
US inventory reports from the Energy Information Administration showed that imports from Venezuela continued to rise, as the country rebounds from the two-month strike that brought its oil industry to a halt.
It also said gasoline stocks fell, and are now 6 per cent below year earlier levels ahead of the summer driving season. Nymex May gasoline contract initially jumped on the report, reaching 87.70 cents a gallon, before settling at 85.95 cents up 0.07 cents.
Recently Opec said its 10 members with oil supply quotas pumped 1.56 million bpd over their agreed ceiling in March, when Iraqi exports stopped. The members, excluding Iraq, supplied 26.06 million bpd on average over the month, versus a formal ceiling of 24.5 million. Following the outbreak of war, the organization used available excess capacities to ensure supply continuity. Prices have slumped by 30 per cent since mid-March.
Iraqi production rarely surpassed 2.5 million bpd under sanctions that prevented investment in Iraq’s oilfields and restricted exports under the UN’s oil for food programme.
In recent days palladium prices have fallen to six year lows. On April 14, it fell to $159 per ounce, representing a fall of about 30 per cent so far this year and 85 per cent from the peak of $1,085 in January 2001. It partly recovered to $166.80/171.80 an ounce, a fall of about $3 on the day.
Palladium, which is used in the catalytic converters that reduce car exhaust emissions, fell $19 this week to $149.00/$154.00 an ounce, to bring its fall in the year to date to about 38 per cent. The metal has dropped more than 85 per cent from a peak of $1,085 an ounce in early 2001, when it was the world’s most expensive metal.
Kevin Crisp, precious metals analyst at Dresdner Kleinwort Wasserstein, said palladium prices were more likely to fall further before rising.
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