NEW YORK, Jan. 13 (UPI) -- Oil markets reacted with a modicum of bullish skepticism Monday to OPEC's decision to hike its production of crude.
Futures prices went up instead of down Monday on the New York Mercantile Exchange and London's International Petroleum Exchange amid an apparent consensus that the increase in OPEC production by 1.5 million barrels per day would not fully offset the ongoing reduced exports from strife-torn Venezuela.
February crude settled up 58 cents on NYMEX at $32.26 per barrel while the IPE gained 53 cents to $30.20 per barrel.
OPEC voted during the weekend to increase its output by 6.5 percent to 24 million barrels per day. However, the tensions between the United States and Iraq continued to add long-term bullishness to the markets while mechanical difficulties at a North Sea oil field and a refinery in Louisiana contributed short-term price support.
The problems at Marathon's Garysville, La., contributed to a 2.71-cent increase in NYMEX gasoline futures and a 1.85-cent rise in heating oil that contributed to the firmer crude prices, although Iraq and Venezuela appeared to be the greater concern.
"The global market is going to remain tight with ongoing war fears," David Thurtell, a strategist with Commonwealth Bank in Sydney told the British Broadcasting Corp.
The additional OPEC production begins in February, but it takes an additional 4-6 weeks for tankers to sail from the Middle East to the United States.
Meanwhile, Venezuelan President Hugo Chavez has been unable to break the political turmoil and labor strife that has centered on the state oil company Petroleos de Venezuela S.A. (PdVSA), a major source of oil and gasoline for the U.S. refining industry.
In addition, the OPEC increase includes a higher quota for Venezuela -- an integral member of OPEC -- and is believed to be currently capable of shipping nowhere near its present quota due to ongoing labor strife that reached its 44th day Monday.
While Chavez's government has pledged to have PdVSA's production up to 2 million barrels per day by Feb.1, analysts aren't confident that level can be reached without a prompt labor settlement.
Venezuela also produces and markets gasoline in the United States under its Citgo subsidiary. A spokesman for the Lyondell-Citgo Refining (LCR) joint venture said Monday that it expected to increase its production at its Houston plant next week after it had been cut to 50 percent by the Venezuela strike.
"We're pleased that shipments to LCR are now increasing and that LCR has successfully plotted a course that we expect will take it to near-full rates over the next month," said Lyondell Executive Vice President Morris Gelb.
Prior to the strike, the LCR refinery received 230,000 barrels per day of crude from Venezuela and had a total processing capacity of 268,000 barrels per day.
(Reported by Hil Anderson, UPI Chief Energy Correspondent)