Crude oil futures rise as OPEC fails to agree on output quotas
Published 10/06/2011 | 05:00
Crude oil increased for a third day after OPEC's failure at a meeting in Vienna to reach an accord on output targets for the first time in at least 20 years.
Futures gained as much as 1.7pc after what Saudi Oil Minister Ali al-Naimi said "was one of the worst meetings we've ever had." Ministers from the 12-nation Organisation of Petroleum Exporting Countries were unable to come to an accord in five hours of talks yesterday.
US initial jobless claims rose last week and the trade deficit narrowed in April.
"OPEC's failure to come to an agreement is still hanging over the market," said Tom Bentz, a broker with BNP Paribas Commodity Futures in New York. "There was a short pull-back upon release of the jobs numbers, but that was quickly overshadowed by the falling trade deficit."
Crude oil for July delivery climbed $1.03 (€0.71), or 1 pc, to $101.77 (€70.12) a barrel on the New York Mercantile Exchange. Prices are up 37pc in the past year.
US jobless claims rose by 1,000 to 427,000 last week. The number of people on unemployment benefit rolls and those receiving extended payments decreased. The US trade deficit shrank 6.7pc to $43.7bn, the lowest level since December.
Consumer confidence increased last week for the third consecutive time as lower gasoline prices lifted Americans' outlook on their finances.
US equities rose for the first time in seven days on the trade deficit and consumer confidence data. The S&P 500 Index advanced 1pc to 1,292.02, and the Dow climbed 118.44 points to 12,167.44.
Saudi Arabia, OPEC's biggest producer, Kuwait, Qatar and the United Arab Emirates were ready to supply more oil to the market, al-Naimi said yesterday in Vienna. The four nations proposed a 1.5 million-barrel-a-day increase.
Libya, Angola, Ecuador, Algeria, Iran and Venezuela were opposed to higher limits, according to al-Naimi. Iraq is exempt from the targets. The 11 members subject to quotas produced 26.22 million barrels-a-day last month, 1.375 million more than pledged, according to Bloomberg News estimates.
The International Energy Agency said it was disappointed that OPEC failed to agree on an increase in output, according to a statement. "Ongoing supply disruptions, as well as the fragile state of the global economy, call for a prompt increase in supply," the group said. (Bloomberg)