OPEC cancelled a meeting planned for 21 July in Vienna, which had been due to discuss whether to raise the quota by a further 500,000 barrels a day (b/d) from 1 August, on top of the 2 million b/d increase from 1 July. The rise – academic as OPEC members are already producing well over 27 million b/d – will proceed, and the organisation will meet again on 15 September.
However, OPEC balanced the bearish effects of the decision by issuing a forecast of 2005 demand conditions, predicting a 340,000-b/d climb in demand for its crude and a 1.7 million-b/d increase in overall global demand. Sources in the group were also widely quoted as saying that the September meeting would discuss an upward revision of the $22-28-a-barrel target price band – another benchmark which has become largely meaningless as prices have failed to fall within the band at any point in 2004.
Supply fears from Iraq abated as both the northern and southern export pipelines managed to survive a week without serious attack. However, simmering unrest in Nigeria continued when eight foreign oil workers were trapped on a rig by protesting local workers, following hard on the heels of a strike which forced a quarter of the country’s production to be shut in. In Venezuela, another serial supply worry, political tension is high ahead of a mid-August referendum on President Chavez’s rule. Caracas, which has frequently threatened to cut supplies to the US market in retaliation for Washington’s perceived support for the opposition, reacted angrily to a statement by President Bush that the vote should be free and fair. And in Russia, the prospect increased of a fire sale of the assets of oil giant Yukos.
Stock data from the US released on 21 July sent contradictory signals. Crude stocks registered an unusual draw, down by 1.2 per cent to 299.3 million barrels. However, the crucial gasoline data was more reassuring, with stocks building by 1.2 per cent to 208.4 million barrels.