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Oil rises above $101 after OPEC output unchanged

Oil rises above $101 after OPEC output unchanged

June 9th, 2011 by ALEX KENNEDY, Associated Press in News

SINGAPORE (AP) - Oil prices rose above $101 a barrel Thursday in Asia, extending gains from the previous session after OPEC leaders unexpectedly left crude production quotas unchanged.

Benchmark oil for July delivery was up 59 cents to $101.33 a barrel at midday Singapore time in electronic trading on the New York Mercantile Exchange. The contract gained $1.65 to settle at $100.74 on Wednesday.

In London, Brent crude for July delivery was up 12 cents to $117.97 a barrel on the ICE Futures exchange.

Leaders of the Organization of Petroleum Exporting Countries, a cartel that controls about 35 percent of global crude output, surprised investors by deciding not to boost production quotas at a meeting Wednesday in Vienna. Analysts had expected an increase of between 1 million and 2 million barrels per day.

Saudi Arabia, the group's biggest supplier, seeks an oil price range between $70 and $80 and supported an output hike. Meanwhile, Iran, the second-largest producer, and other OPEC members such as Venezuela and Algeria, sought to keep quotas unchanged. OPEC said the group was unable to reach a consensus and will discuss production levels again at its next meeting in three months.

Saudi oil minister Ali Naimi called the meeting "one of the worst ever."

Analysts expect Saudi Arabia would likely raise its production independently if crude prices jump much higher above $100.

"We suspect that if prices pick up any further, those members that did want to increase quotas, led by Saudi Arabia, will simply increase supply anyway," Capital Economics said in a report.

In other Nymex trading in July contracts, heating oil fell 0.4 cent to $3.09 a gallon and gasoline dropped 1.0 cent to $2.99 a gallon. Natural gas futures slid 1.7 cents to $4.83 per 1,000 cubic feet.