OPEC to raise output 2%; oil prices hit new high

ISFAHAN, Iran — OPEC left the intense global thirst for oil unquenched on Wednesday when it raised its output quota by 2 percent, a symbolic gesture that will not add supply to the market. Oil prices climbed to a new high above $56 a barrel.

Driven by fears of a supply crunch next winter, the Organization of Petroleum Exporting Countries agreed to immediately authorize the pumping of an extra half-million barrels of oil a day and to approve a similar boost later if prices do not fall.

But the market took little comfort from OPEC's decision because the group is known to be already exceeding its production ceiling by about 700,000 barrels a day.

Officials from Saudi Arabia and Kuwait stressed that more oil would be available soon, though. They said they will produce at least an additional 370,000 barrels a day by April.

The price of crude futures nevertheless climbed to a new high above $56 a barrel on Wednesday, as traders digested the news from OPEC as well as the latest petroleum supply report from the U.S. government, which showed that domestic supplies of gasoline and heating oil fell sharply last week.

On the New York Mercantile Exchange, light sweet crude for April delivery rose $1.41 to $56.46 a barrel. The previous Nymex settlement peak was $55.17, set twice in October.

OPEC's acting secretary general voiced disappointment at the market's reaction. "It's not the result we wanted," said Adnan Shihab-Eldin. "Prices should have eased."

OPEC oil ministers said they were helpless.

"The market has confused us," said Iranian oil minister Bijan Namdar Zangeneh. His Saudi counterpart Ali Naimi said: "Ask the market why prices went up."

OPEC's decision to look to next winter and raise its quota just ahead of the Northern Hemisphere springtime — when demand normally falls — was unusual. It reflected concern about OPEC's ability to influence a stubbornly bullish market that has driven prices of benchmark light crude up about 33 percent this year alone.

Gasoline prices are also soaring, with the U.S. average now $2.06 a gallon.

Edmund Dakouru, a Nigerian oil official, said, "the extra oil will go a long way" toward meeting any concerns about next winter's supply.

But others at the meeting suggested the decision was symbolic.

"We're already all over quota," Algerian Oil Minister Chakib Khelil told reporters.