Crude Oil Drops to 3-Month Low as OPEC Signals Boost in Output 
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May 16 (Bloomberg) -- Crude oil dropped to the lowest in almost three months after the secretary general of OPEC, which pumps 40 percent of the world's oil, said the group may boost production capacity by the end of this year.
The Organization of Petroleum Exporting Countries will raise capacity to 32.7 million barrels a day, Secretary General Adnan Shihab-Eldin said in Kuwait yesterday. OPEC can pump about 32.2 million barrels today, according to a Bloomberg survey. Higher output from OPEC has helped lift U.S. inventories to the highest in almost five years.
``If OPEC increases capacity it's only going to put further downward pressure on oil prices,'' said John Kilduff, vice president of risk management at Fimat USA in New York. ``We could be looking at $45 a barrel in near-term trading.''
Crude oil for June fell 92 cents, or 1.9 percent, to $47.75 a barrel at 11:32 a.m. on the New York Mercantile Exchange. Oil has dropped 18 percent from a record $58.28 on April 4. Futures touched $47.60 a barrel, the lowest since Feb. 18. Prices are 15 percent higher than a year ago.
Brent crude oil for June settlement fell 94 cents, or 1.9 percent, to $47.72 on London's International Petroleum Exchange.
U.S. crude stockpiles have increased 14 of 18 weeks so far this year, reaching their highest level since July 1999. OPEC is pumping almost as much as it can so supplies will accumulate, easing concern production will be strained in the second half of the year.
OPEC appears ``well prepared to meet fourth-quarter demand,'' said Marshall Steeves, an analyst with Refco Inc. in New York. ``Imports are still coming in at a good clip and refiners are starting to recover from some of the outages they've had in the last few weeks.''
Higher Imports
Imports have averaged 10.1 million barrels a day so far this year, 4.6 percent higher than during the same period last year, Energy Department data show. U.S. oil inventories probably gained 1.38 million barrels last week, the median estimate of 10 analysts and traders surveyed by Bloomberg.
The Organization of Petroleum Exporting Countries' tanker loadings are scheduled to rise 0.9 percent in the four weeks ending May 28, compared with the previous four weeks, the consulting company Oil Movements said May 13. The total is 24.5 million barrels a day, 230,000 a day more than in the prior period, the consultant said.
``Stocks have been building because OPEC has been responding to higher prices,'' said John Waterlow, an oil analyst at Wood Mackenzie Consultants Ltd. in Edinburgh. ``There's evidence that long-lasting high prices are finally having an impact on demand.'' Prices may have peaked for this year, he said.
Gasoline Demand
Gasoline demand in the U.S. peaks between Memorial Day, at the end of the month, and Labor Day in early September. Supplies in the week ended May 6 were 3.2 percent larger than the seasonal average for the past five years, the Energy Department said. Crude stockpiles exceeded their average by 6.5 percent.
``We're in the shoulder season,'' Refco's Steeves said. ``There's not very much weather demand and the summer driving season hasn't started yet.''
The International Energy Agency, an adviser to 26 industrialized nations on energy, last week cut its forecast for China's oil demand growth this year to 7.4 percent, compared with expansion of 16 percent last year. The University of Michigan said on May 13 that U.S. consumer sentiment unexpectedly fell in May as gasoline prices increased.
Pumping More
OPEC raised its production quotas on March 16, marking a change in its policy of reducing output in the second quarter, when demand is usually lower. Member countries are pumping more oil to help meet world consumption, Shihab-Eldin said.
The group of 11 oil producers is pumping more than 30 million barrels a day, Shihab-Eldin said, out of the 32.2 million a day Bloomberg data estimates it can produce. That capacity will rise to about 32.7 million barrels a day by the end of the year, Shihab-Eldin said.
The U.S. needs to become less dependent on foreign sources of petroleum by increasing automobile fuel efficiency and drilling for oil in the Arctic National Wildlife Refuge in Alaska, President George W. Bush said in a speech at a refinery in West Point, Virginia, that makes diesel fuel from plant matter.
Listen May 16 (Bloomberg) -- Crude oil dropped to the lowest in almost three months after the secretary general of OPEC, which pumps 40 percent of the world's oil, said the group may boost production capacity by the end of this year.
The Organization of Petroleum Exporting Countries will raise capacity to 32.7 million barrels a day, Secretary General Adnan Shihab-Eldin said in Kuwait yesterday. OPEC can pump about 32.2 million barrels today, according to a Bloomberg survey. Higher output from OPEC has helped lift U.S. inventories to the highest in almost five years.
``If OPEC increases capacity it's only going to put further downward pressure on oil prices,'' said John Kilduff, vice president of risk management at Fimat USA in New York. ``We could be looking at $45 a barrel in near-term trading.''
Crude oil for June fell 92 cents, or 1.9 percent, to $47.75 a barrel at 11:32 a.m. on the New York Mercantile Exchange. Oil has dropped 18 percent from a record $58.28 on April 4. Futures touched $47.60 a barrel, the lowest since Feb. 18. Prices are 15 percent higher than a year ago.
Brent crude oil for June settlement fell 94 cents, or 1.9 percent, to $47.72 on London's International Petroleum Exchange.
U.S. crude stockpiles have increased 14 of 18 weeks so far this year, reaching their highest level since July 1999. OPEC is pumping almost as much as it can so supplies will accumulate, easing concern production will be strained in the second half of the year.
OPEC appears ``well prepared to meet fourth-quarter demand,'' said Marshall Steeves, an analyst with Refco Inc. in New York. ``Imports are still coming in at a good clip and refiners are starting to recover from some of the outages they've had in the last few weeks.''
Higher Imports
Imports have averaged 10.1 million barrels a day so far this year, 4.6 percent higher than during the same period last year, Energy Department data show. U.S. oil inventories probably gained 1.38 million barrels last week, the median estimate of 10 analysts and traders surveyed by Bloomberg.
The Organization of Petroleum Exporting Countries' tanker loadings are scheduled to rise 0.9 percent in the four weeks ending May 28, compared with the previous four weeks, the consulting company Oil Movements said May 13. The total is 24.5 million barrels a day, 230,000 a day more than in the prior period, the consultant said.
``Stocks have been building because OPEC has been responding to higher prices,'' said John Waterlow, an oil analyst at Wood Mackenzie Consultants Ltd. in Edinburgh. ``There's evidence that long-lasting high prices are finally having an impact on demand.'' Prices may have peaked for this year, he said.
Gasoline Demand
Gasoline demand in the U.S. peaks between Memorial Day, at the end of the month, and Labor Day in early September. Supplies in the week ended May 6 were 3.2 percent larger than the seasonal average for the past five years, the Energy Department said. Crude stockpiles exceeded their average by 6.5 percent.
``We're in the shoulder season,'' Refco's Steeves said. ``There's not very much weather demand and the summer driving season hasn't started yet.''
The International Energy Agency, an adviser to 26 industrialized nations on energy, last week cut its forecast for China's oil demand growth this year to 7.4 percent, compared with expansion of 16 percent last year. The University of Michigan said on May 13 that U.S. consumer sentiment unexpectedly fell in May as gasoline prices increased.
Pumping More
OPEC raised its production quotas on March 16, marking a change in its policy of reducing output in the second quarter, when demand is usually lower. Member countries are pumping more oil to help meet world consumption, Shihab-Eldin said.
The group of 11 oil producers is pumping more than 30 million barrels a day, Shihab-Eldin said, out of the 32.2 million a day Bloomberg data estimates it can produce. That capacity will rise to about 32.7 million barrels a day by the end of the year, Shihab-Eldin said.
The U.S. needs to become less dependent on foreign sources of petroleum by increasing automobile fuel efficiency and drilling for oil in the Arctic National Wildlife Refuge in Alaska, President George W. Bush said in a speech at a refinery in West Point, Virginia, that makes diesel fuel from plant matter.
