Rumors have it that: The Organization of the Petroleum Exporting Countries plans to raise its oil production quota for the first time in several years, OPEC sources tell CNBC ahead of the cartel's meeting in Vienna on Wednesday.
The amount by which the quota will be raised is still under discussion, these sources said.
Separately, Dow Jones reported that the committee will recommend that OPEC boost oil production, but there is uncertainty among the producers' group due to a weakening economic outlook and continuing Mideast strife. The report said an increase of 1 million to 1.5 million barrels a day will be suggested.
Oil prices were lower Tuesday amid the uncertainty over OPEC's decision.
Currently, OPEC's quota calls for oil production of 24.845 million barrels per day. However, some sources speculate that actual production is more than 26 million barrels per day. [So will more oil really come on the market or is this just to bring the quota up to where OPEC production is today?]
Also, Saudi sources denied earlier reports that said they would go ahead and raise oil production.
My take:
Technicals are showing support/resistance at $100/bbl and very strong support at $96/bbl (tested 4 times since May 6).
One year chart of the weekly moves shows oil price is right back to the upward trend line it was on prior to airstrikes against Libya.
What's interesting to me is that oil is flopping around like crazy on a daily basis but the weekly moves have been much smaller. For the last five weeks, WTI has closed in the tight $99 to $101 range.
My take on the Morgan Stanley and Goldman Sachs analysts reports is that they expect oil to flop around in this range ($95 - $105) for another couple months then drift higher into year-end. QE3 (weaker dollar) will definitely take it higher.
I agree that if OPEC were to announce a significant increase in production the price of oil would fall, but I don't see that happening. Is there really a market for the lower quality crude that Saudi can bring on the market?
Oil Prices
Oil Prices
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group
Re: Oil Prices
VIENNA (AP) -- Mideast turmoil, a faltering world economy and divisions on whether to raise crude production promise to make Wednesday's OPEC meeting one of the more volatile in recent history.
In the end, the 12-nation group will probably opt to increase output levels to reduce international concerns about the high price of oil. But some influential members are looking to raise the cost of crude.
Indirectly endorsing lower prices, Angolan Oil Minister Jose Maria Bothelo de Vasconselos told reporters Tuesday his country could accept an OPEC decision to raise output targets, "if the market needs more oil." Iraqi oil minister Abdul-Karim Elaibi differed, saying a price of between $100 and $120 a barrel is "reasonable."
That level is at or above present prices and is considered too high by major oil-consuming countries struggling with their economies. And it goes against efforts by OPEC kingpin Saudi Arabia to push prices downward.
OPEC oil ministers usually face easier choices at the regular meetings, where they seek agreement on how much to pump and sell to the rest of the world. But the mixed signals ahead of Wednesday's session are making decisions difficult.
The unrest in Libya and Yemen threatens to destabilize larger oil-producing nations in the region. The two countries normally produce less than 4 percent of the world's oil needs, and Saudi Arabia and others have boosted output to make up for much of the shortfall. But worries that the violence could spread to bigger producers and seriously cut into world output has caused jitters, both from crude exporting nations and from the U.S., China and other consumers with huge energy needs.
Kuwait's oil minister, Mohammed al-Busairi said, markets are being "hugely affected" by the unrest in Libya, in an interview with the official Kuwait news agency KUNA and Kuwait TV.
In the end, the 12-nation group will probably opt to increase output levels to reduce international concerns about the high price of oil. But some influential members are looking to raise the cost of crude.
Indirectly endorsing lower prices, Angolan Oil Minister Jose Maria Bothelo de Vasconselos told reporters Tuesday his country could accept an OPEC decision to raise output targets, "if the market needs more oil." Iraqi oil minister Abdul-Karim Elaibi differed, saying a price of between $100 and $120 a barrel is "reasonable."
That level is at or above present prices and is considered too high by major oil-consuming countries struggling with their economies. And it goes against efforts by OPEC kingpin Saudi Arabia to push prices downward.
OPEC oil ministers usually face easier choices at the regular meetings, where they seek agreement on how much to pump and sell to the rest of the world. But the mixed signals ahead of Wednesday's session are making decisions difficult.
The unrest in Libya and Yemen threatens to destabilize larger oil-producing nations in the region. The two countries normally produce less than 4 percent of the world's oil needs, and Saudi Arabia and others have boosted output to make up for much of the shortfall. But worries that the violence could spread to bigger producers and seriously cut into world output has caused jitters, both from crude exporting nations and from the U.S., China and other consumers with huge energy needs.
Kuwait's oil minister, Mohammed al-Busairi said, markets are being "hugely affected" by the unrest in Libya, in an interview with the official Kuwait news agency KUNA and Kuwait TV.
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group
Re: Oil Prices
VIENNA (AP) -- OPEC says it has decided to maintain output levels, with the option of meeting within the next three months for a possible production hike.
The decision is unexpected and reflects unusual tensions in an organization that usually works by consensus.
Saudi Arabia and other influential Gulf nations had pushed to increase production ceilings to calm markets and ease concerns that crude was overpriced for consumer nations struggling with their economies. Those opposed were led by Iran, the second-strongest producer within the Organization of the Petroleum Exporting Countries.
OPEC Secretary General Abdullah Al-Badri told reporters: "We are unable to reach consensus to ... raise our production."
The decision is unexpected and reflects unusual tensions in an organization that usually works by consensus.
Saudi Arabia and other influential Gulf nations had pushed to increase production ceilings to calm markets and ease concerns that crude was overpriced for consumer nations struggling with their economies. Those opposed were led by Iran, the second-strongest producer within the Organization of the Petroleum Exporting Countries.
OPEC Secretary General Abdullah Al-Badri told reporters: "We are unable to reach consensus to ... raise our production."
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group