Support building for increase in oil production

ABU DHABI, United Arab Emirates — Oil prices slipped Tuesday as support seemed to be gathering among OPEC members to raise their cap on crude production at a time when many U.S. motorists are paying more than $2 for a gallon of gas.

United Arab Emirates Oil Minister Obaid bin Saif al-Nasseri said Tuesday the UAE believes the Organization of Petroleum Exporting Countries should increase its production to match the global demand for oil.

But al-Nasseri declined to give figures when he spoke to reporters, leaving open the question of whether the UAE endorses the Saudi proposal for a 6 percent rise in OPEC’s production or would like to see a bigger increase.

With oil approaching $42 a barrel this week, analysts have said the cartel needs to pump more crude to lower prices.

Al-Nasseri said the Saudi proposal would be discussed at OPEC’s emergency meeting in Amsterdam this weekend, but a decision would be taken only at the scheduled OPEC meeting in Beirut on June 3.

In trading Tuesday afternoon, light sweet crude for June delivery fell 55 cents to $41 on the New York Mercantile Exchange, after slipping as low as $40.55 earlier in the session. Brent crude from the North Sea fell 64 cents to $37.27 on London’s International Petroleum Exchange.

On Monday the Energy Department reported that the price of unleaded gasoline last week averaged $2.017 per gallon, up 7.6 cents from the previous week. That was the first time the national average topped $2, the agency said.

OPEC, which produces about a third of the world’s oil supply, currently has a production ceiling of 23.4 million barrels a day. But members break their quotas and are believed to be producing a total estimated at about 2 million barrels above the ceiling.

The Emirates would increase its production, but it has only “limited” capacity to do so, al-Nasseri said. The Emirates’ quota under OPEC is 2.051 million barrels a day. Independent market surveys say that last month its production was about that level.

Asked about high oil prices, al-Nasseri said: “If we were to compare them with 1991 prices, we would find the real value of the oil price is $25 a barrel … considering the inflation rate and the fall of the (U.S.) dollar.”