Oil below $50, Opec to up May oil supply

The Opec oil cartel will raise supply to near 25-year highs next month even though it will postpone a rise in formal production quotas until...

The Opec oil cartel will raise supply to near 25-year highs next month even though it will postpone a rise in formal production quotas until a June meeting, the group’s President said on Monday.

Kuwait’s Sheikh Ahmad al-Fahd al-Sabah said the group will raise production by around 500,000 barrels per day (bpd) to prepare for an expected demand surge later this year.

This would take Opec production back above 30 million bpd for the first time in six months, near 25-year highs hit last year as producers struggled to meet rising world consumption. “Because of the behaviour of the market for the third quarter, we think in May there will be a real production for another 500,000,” Sheikh Ahmad told reporters.

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“In order to guarantee the flow of crude oils to the markets there will be an automatic increase from the members without a resolution (from Opec),” he added.

Middle East Gulf producers are eager to raise output to encourage stock building in the coming months, creating a buffer for strong demand later this year.

Meanwhile, oil prices extended a losing streak on Monday, striking an eight-week low under $50 a barrel as growing supplies outweighed worries of rising global demand.

US light crude traded as low as $49.66 a barrel, the lowest since Feb. 22, before recovering to $49.96, down 53 cents. Brent crude fell 88 cents to $50.73. US crude oil prices have fallen around 14 per cent from an all-time peak of $58.28 hit two weeks ago, driven by swelling crude stocks and signs of slower Chinese demand growth. “People who bought in at the highs are probably getting a bit nervous now,” said David Thurtell, Sydney-based commodities strategist with the Commonwealth Bank of Australia. — Reuters