New York – Oil prices rose to a record settlement price Tuesday as traders turned their attention to a government inventory report expected to show tight supplies and shrugged off OPEC’s decision to boost output.
Even factoring in the decision by the Organization of the Petroleum Exporting Countries to increase oil production by 500,000 barrels per day starting Nov. 1, “supplies are tight,” said Addison Armstrong, an analyst at TFS Energy Futures LLC.
They may get even tighter. Analysts surveyed by Dow Jones Newswires expect today’s report from the Energy Department to say that crude-oil inventories fell by 2.7 million barrels in the week ended Friday.
Light, sweet crude for October delivery rose 74 cents to settle at $78.23 a barrel. The settlement price bested the previous record, set July 31, by 2 cents.
Many OPEC countries produce more oil than their quotas. But OPEC spokesman Omar Farouk Ibrahim said the announced increase would be based on the group’s current production, not quotas – meaning the 12-nation cartel will be adding actual oil to the market.
That translates into a quota increase of nearly 1.4 million barrels per day, Evans said.
“This is a big number,” Citigroup analyst Tim Evans said, adding that it would take awhile to digest its significance.
