NEW YORK (Dow Jones Newswires), August 12, 2008
The Organization of Petroleum Exporting Countries in July increased its oil production by 370,000 barrels a day, according to U.S. government estimates released Tuesday.
Saudi Arabia was responsible for most of the increase, as the world's largest oil exporter raised its production 250,000 barrels a day, the U.S. Energy Information Administration said in its monthly Short-Term Energy Outlook.
The EIA expects Saudi Arabia to maintain its July production through the third quarter. The agency revised its third-quarter OPEC production forecast up 200,000 barrels a day to 32.9 million barrels. The group's members averaged 32.3 million barrels a day in the second quarter.
Production from other OPEC members was largely steady.
Saudi Arabia's production increase came even as oil prices tumbled due to concerns about demand in the U.S. and Europe. Crude futures have dropped from a record intraday high of $147.27 a barrel on July 11 to $113.68 a barrel Tuesday afternoon. The new production is likely not behind the drop, the EIA said.
"Although an increase in the supply cushion could ease upward price pressure, it does not appear large enough to trigger a sharp price decline," the EIA said.
Oil prices could still be forced higher by tight supplies, the EIA said.
"Possible delays in adding supply capacity, proactive OPEC decisions to cut output, or expectations that supply growth in the post-2009 period will have a difficult time keeping pace with demand, could minimize and shorten any market weakness," the EIA said.
Copyright (c) 2008 Dow Jones & Company, Inc.
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