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OPEC favours spare capacity oil offer
OPEC inched towards a deal on Tuesday that would make available to oil buyers its remaining spare capacity rather than the immediate supply increase some consumer countries had urged, Reuter reported. Most in the Organization of Petroleum Exporting Countries favour an offer of its last 2 million barrels a day of reserves, leaving official output quotas unchanged, OPEC President Sheikh Ahmad al-Fahd al-Sabah said. "I believe that most members will go for the 2 million," he told reporters before a meeting that started at 0800 GMT to decide policy. Sheikh Ahmad said a second option that would increase output quotas by 500,000 barrels a day to 28.5 million bpd, with another 500,000 bpd possible later at his discretion, was still alive. " Several ministers have said they are opposed to higher output limits when global refining capacity is at full stretch and unable to process more crude. "We've already played this gimmick," said Nigerian Oil Minister Edmund Daukoru. "We want to play clean so we don't even raise the ceiling." There appears little the 11-member group can do to control oil prices that were blown higher again on Monday by the threat of a tropical storm heading for U.S. Gulf oil facilities. "OPEC is not going to be the decisive action but we want to reassure the market by saying we have this extra capacity," said Daukoru. U.S. crude shot up more than $4 a barrel on Monday, easing back 60 cents on Tuesday to $66.79 as dealers feared a further setback to the U.S. energy industry after Hurricane Katrina. OPEC has come under pressure from European Union finance ministers to immediately push more crude on to a market where refinery bottlenecks are limiting processing capability for transport fuels. The cartel drew support on Monday from the United States where a senior U.S. government analyst said producers would find it difficult to place more oil because crude inventories were already sufficient. "The market feels fairly comfortable with the crude it has at these prices," said Doug MacIntyre, analyst with the Energy Information Administration. "It's difficult for me to envision (the OPEC offer) having too much of an impact. Crude inventories here in the U.S. are looking pretty good."
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