AP: Crude Falls As OPEC Maintains Production, FTSE350 Oil And Gas Plays Find Support Led By Cairn And Shell
Crude oil fell around two thirds of a percent as OPEC said at its meeting in Luanda, Angola, that it would maintain its current production levels in the coming year, with total production quotas at 24.845 million barrels a day. Front-month WTI futures fell 50 cents in electronic trading on Globex, trading at $73.20.
Among other comments from Angola, Iraq plans to double its exports to China in 2010. Iraqi oil minister Hussain al-Shahristani said OPEC intends to supply 300,000 barrels of oil per day to the the country. As it recovers from the war, the gulf state aims to increase its oil production from 2.5 million barrels per day to 12 million by 2020. Iraq is currently exempt from OPEC production quotas.
Today’s decision was broadly expected, as on a number of occasions in recent weeks, OPEC members had said that recent prices do not reflect the fundamentals in the underlying marketplace, and that the weak US dollar had been the driving force behind the rally above $80/barrel.
In London, major oil and gas stocks rose this morning. Cairn Energy (LSE: CNE) led the way with a 4% advance, while super-majors Shell (LSE: RDSB) and BP (LSE: BP) followed with gains of 2.8% and 1.4% respectively. Petrofac (LSE: PFC) and BG Group (LSE: BG) both climbed 1.2%, while Tullow Oil (LSE: TLW) added less than 1%.
Most midcaps moved along as Dana Petroleum (LSE: DNX) tacked on 1.2% and fellow FTSE 250 constituents Dragon Oil (LSE: DGO) and Heritage Oil (LSE: HOIL) posted small gains. Melrose Resources (LSE: MRS) sank to the bottom of the sector with a 3.5% slide.
North Sea explorers Xcite Energy (AIM: XEL) led the small caps with a 7.5% gain. North American based explorer Nighthawk Energy (AIM: HAWK) and Africa and FSU operating oil and gas junior Victoria Oil & Gas (AIM: VOG) followed with gains of 5.5%.
