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NEW YORK -- The Organization of Petroleum Exporting Countries (OPEC) agreed yesterday to increase production by 500,000 barrels a day, an increase thought to be insufficient to meet strengthening demand, Bloomberg News reported.
OPEC ministers reviewed three options at the meeting yesterday in Vienna. The first would have kept production quotas unchanged, which would have allowed oil prices to rise, a separate Bloomberg News report stated. The second option would have increased production by 500,000 barrels a day, and the third option would have raised supply by as much as 1 million barrels per day, the report stated.
Since OPEC members curbed exports to slim inventories, oil prices have risen 27 percent this year, the report stated. Crude oil for October delivery fell 0.25 cents to $77.24 a barrel on the New York Mercantile Exchange yesterday morning, but rose to a record close of $78.23 a barrel.
Saudi Arabia, the largest member of OPEC, led the group to adopt the increase today, Bloomberg News reported. The target, 27.2 million barrels a day, will begin Nov. 1, Kuwait's Oil Minister Mohammed Abdullah al-Aleem told Bloomberg News.
"We are going to need more than 500,000 barrels to meet rising demand," Tom Bentz, a broker at BNP Paribas in New York, told Bloomberg News. "We are also up on speculation that the interest rates will be cut, which would help the economy and lead to higher demand for oil."
"This shows that the Saudis still run this group," said Bill O'Grady, director of fundamental futures research at A.G. Edwards & Sons in St. Louis. "The Iranians and Venezuelans made it very clear before the meeting that they had no intention of agreeing to an increase."