Oil flirts with 30-dollar barrel, prompting call for OPEC output hikegreenspun.com : LUSENET : Grassroots Information Coordination Center (GICC) : One Thread
Oil flirts with 30-dollar barrel, prompting call for OPEC output hike by Marie Wolfrom
LONDON, May 21 (AFP) - Oil prices welled up to three-month highs around 30 dollars a barrel on Monday, prompting a fresh call for OPEC to raise output -- or risk a repeat of last year's runaway prices.
The New York light sweet crude June contract rose 10 cents in early trade on Monday to 30.01 dollars a barrel, while Brent July futures climbed as high as 29.68 dollars a barrel, before retracing towards the 29.39-dollar mark at which it closed on Friday evening.
The last time Brent was seen at such levels was on February 9.
Analysts said the recent rally in prices was due to continued tightness in the US gasoline market and rising tension in the Middle East.
And the London-based Centre for Global Energy Studies warned that the world faced a repeat of last year's autumn price spiral unless the Organisation of Petroleum Exporting Countries (OPEC) increases output next month.
"Because of the delay between any decision to raise its output and an increase in crude deliveries to refineries, OPEC needs to anticipate price squeezes and act well in advance," the CGES said in its closely watched monthly oil report.
"Should OPEC continue to react to existing market conditions, rather than pre-empting a third-quarter squeeze, it will trigger a repeat of the extreme price volatility we witnessed during the second half of last year," the CGES said, calling for a swift output rise at OPEC's meeting next month.
It said that failure to do so would result in world stocks running down to just 82 days' worth of demand by the end of September -- an even tighter situation than during autumn 2000, when prices spiked to 10-year highs well above 35 dollars a barrel.
OPEC ministers meet to discuss output in Vienna on June 5, but few are expecting the 11-nation cartel to agree to open the floodgates.
"There will not be a production hike," said OPEC President Chakib Khelil in Tehran this weekend.
The market is facing a similar combination of factors that squeezed prices so tightly last year.
A sharp recent rise in US gasoline prices with the summer 'driving season' just days away has turned the mood cautious. Any fall in US reserves over the coming weeks will prompt a rush for crude by refineries towards the end of summer, triggering a price jump, analysts believe.
"With last week's sharp drop in US refinery capacity utilisation, traders are concerned that this week's figures will show a further slide in gasoline supplies and stocks," GNI analyst Lawrence Eagles wrote in a research note.
Meanwhile, an escalation of violence in the Middle East, including the use of Israel warplanes against Palestinians for the first time since the 1967 Arab-Israeli war, raised market concerns that oil-producing Arab Gulf states might become embroiled in the conflict.
Finally, the CGES noted that further upward pressure on prices may filter through from the upcoming roll-over of Iraq's oil-for-food deal in June.
"The roll-over is often accompanied by a disruption to Iraq's oil exports and US attempts to improve the workings of the sanctions on Iraq make an interruption all the more likely this time," it said.
Iraqi exports were disrupted in December and January due to a dispute over the sanctions regime, in place since Iraq invaded Kuwait in 1990.
-- Martin Thompson (email@example.com), May 21, 2001
Oh, boy, here we go again. Will this roller coaster ever stop?
-- Case (firstname.lastname@example.org), May 21, 2001.
It almost seems like I posted these same articles last year.
-- Martin Thompson (email@example.com), May 21, 2001.
What passed my by was last week's sharp drop in refinery utilization. What was that all about?
-- Loner (firstname.lastname@example.org), May 21, 2001.