OPEC cartel is contemplating increasing oil production quotas amid the widening gap between supply and demand. As a response to the speculation, oil fell in New York against earlier gains.
The U.S. gasoline demand fell 2.9 percent last week, according to reports. U.S. has increased the forecast for oil consumption for this year but cutting its price estimate. ?Crude oil delivery for July dropped by 64 cents to $98.45 a barrel in electronic trading on the New York Mercantile Exchange and was closed at $98.68m. U.S. Energy Department has? forecast the oil consumption to be 88.43 million barrels a day ?this year.
The situation in ICE Futures Europe exchange is also the same, where it fell by 63 cents to close at $116.15 a barrel.
The move is to meet the growing demand and due to poor output from Libya due to the unrest in the region. The 12 members of OPEC countries together produce and supply approximately 40 percent of global oil supplies.? Any increase in the output targets will replace the missing supplies from Libya to meet the demand projected for this year. The International Energy Agency has requested OPEC members to provide an immediate increase in production and supply to stabilize oil prices and also to meet the seasonal demand in the coming months.
According to analysts, the production quota is likely to be increased by 1.5 million barrels a day. This capacity is the spare capacity of the OPEC group. The spare capacity of OPEC was 5.94 million barrels a day in May.