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OPEC increases output first time in 10 months

14 May 2009 14:25 (UTC +04:00)

BakÄ±. Vahab Rzayev â€“ APA-Economics. OPEC increased crude oil production last month for the first time since July as higher crude prices encouraged members to backtrack on their output quotas, Bloomberg reports.
The 11 members bound by targets pumped 25.8 million barrels a day, compared with their official Jan. 1 limit of 24.845 million a day, the group said yesterday. That means OPEC collectively completed 77 percent of its promised reduction, compared with 82 percent compliance in March. The IEA said today that members achieved 78 percent of the cuts.
Option holders betting on oil rallying above $60 a barrel missed out on profiting from the trade after the underlying June futures contract exceeded $60 only during a two-minute and nine- minute period two days ago, before retreating. The June options will expire at the end of trading today.
December and June are typically the most widely traded options contracts for the year, since they represent full-year and half-year markers for those who buy options months or years in advance.
Among June crude options, the so-called $60 calls and $60 puts were the most widely held options contracts, representing big bets on whether oil would succeed, or fail, in rising above $60.
Oil fell for a second day after the International Energy Agency cut its 2009 forecast for world oil demand, projecting consumption will drop the most since 1981.
The IEA, the Paris-based adviser to 28 nations, reduced its demand estimate to 83.2 million barrels a day this year, down 3 percent from 2008. Thatâ€™s 230,000 barrels a day lower than it forecast last month. OPEC also cut its 2009 oil use outlook yesterday and said it increased supplies last month.
Crude oil for June delivery sank as much as $1.47, or 2.5 percent, to $56.55 a barrel on the New York Mercantile Exchange, and traded at $56.93 at 12:42 p.m. London time. Yesterday, the contract fell 1.4 percent to settle at $58.02 a barrel, the biggest one-day decline since April 27, after the Organization of Petroleum Exporting Countries said it increased production.
Demand is lowest in the most developed nations, where oil use will drop by 5.1 percent this year, the IEA said, citing â€œvery weakâ€ U.S. consumption in April. Demand in developing economies is forecast to fall for the first time since 1994 as China and Russia â€œcontinue to exhibit sustained weakness.â€