Oil Rises for First Session in Four on OPEC Output Constraints

Crude oil rose for the first day in four as investors said any promise of higher output from OPEC would be hollow because the group has little additional production capacity.

The Organization of Petroleum Exporting Countries has a proposal to raise its output quota by 500,000 barrels a day, Sheikh Ahmad Fahd al-Sabah, the group’s president, said before meeting with the European Union in Brussels today. OPEC meets in Vienna on June 15 to discuss production targets. Output has exceeded targets since January 2001.

“There is a risk premium in the market because OPEC doesn’t have a lot of spare capacity,” said Paul Sankey, senior oil analyst at Deutsche Bank Securities in New York. “If we get hotter and drier this summer prices will definitely reach $60.”
Bloomberg