Crude oil slips on OPEC plans

www.globeandmail.com Bloomberg News Saturday, January 11, 2003 – Page B15

Crude oil fell, completing its first weekly decline since mid-November, on expectations that the Organization of Petroleum Exporting Countries will boost production to make up for a shortfall from Venezuela.

Tomorrow, OPEC will probably raise its output quota by one million to 1.5 million barrels a day, analysts said. Prices have risen 16 per cent since Dec. 2, when Venezuelan workers went on strike seeking the ouster of President Hugo Chavez. The country's daily output has since dropped by about 2.3 million barrels.

"OPEC, outside of Venezuela, is already increasing production," said Jay Saunders, an analyst at Deutsche Bank Securities in Edinburgh. "OPEC should be worried about all of their increased production hitting the market at the same time Venezuelan oil comes back."

Soybean futures had their biggest drop in 18 months after the government said U.S. farmers harvested a larger crop than expected.

The U.S. Department of Agriculture raised the estimate of last year's harvest by 1.5 per cent to 2.73 billion bushels partly on increased production in Iowa and Minnesota, which escaped the drought conditions that reduced crops in other growing states. The U.S. government also boosted its estimate of the surplus of unsold beans on Aug. 31 by 8.6 per cent from December.

Copper prices fell for the first time in three sessions after the U.S. Labor Department reported an unexpected drop in U.S. payrolls last month, signalling that the economy is too weak to stimulate industrial demand for metals.

Prices slipped from a five-week high on increased concern that the U.S. economic recovery is proceeding too slowly to boost use of the metal by car makers and other manufacturers. The number of employed Americans fell by 101,000 in December, the biggest decline in 10 months, the report showed.