OPEC set to increase production on Wednesday
Senior source tells Reuters "$100 oil is scaring people"
OPEC are set to agree an increase production at their June summit on Wednesday, accoring to various news sources over the weekend.
A senior delegate told Dow Jones Newswires that "the most likely outcome of the next meeting will be an increase".
A delegate is quoted by Reuters saying "there is a need for an increase to replace the loss from Libya [...] oil prices are too high. $100 oil is scaring people.”
The reported comments follow the Friday meeting of OPEC's Economic Commission Board ahead of the bi-annual Vienna meeting, which recommended an increase in output on the back of predicted growth in oil demand in the second half of 2011, according to Reuters.
The producers' co-operative has faced criticism for failing to respond to shocks in supply and signs of weakening economic recovery with increased supply, most notably by the International Energy Agency. The IEA, an oil purchasers' co-operative, issued an unprecedented statement on 19 May making the case for the "urgent need for additional supplies".
The Governing Board of the IEA on 19 May raised "serious concern that there are growing signs that the rise in oil prices since September is affecting the economic recovery by widening global imbalances, reducing household and business income, and placing upward pressure on inflation and interest rates"
"The amount of the increase is yet to be decided by OPEC ministers," the delegate told the Wall Street Journal. "All the numbers in the market now are just guesswork."
The sentiment is liekly to be contested on Wednesday by Iran's OPEC governor, Muhammad Ali Khatibi. Speaking to the Wall Street Journal yesterday, Khatibi said a move to boost output was "difficult to understand" in light of high inventories and the recent drop in oil prices.
"We should respond based on facts and figures, not based on rumors or expectations from OPEC," Mr. Khatibi said.
Khatibi's remarks sets the stage for a fractious OPEC meeting on Wednesday. It remains unresolved whether a representative from either side in the Libyan conflict will attend, with Qatar's assistance to the rebels providing further controversy.