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Monday May 21 1:48 AM ET

Oil Tops $30 Led by Gasoline, OPEC Concerns

SINGAPORE (Reuters) - Oil prices climbed above $30 per barrel on Monday as tight gasoline supplies and concerns over OPEC (news - web sites) production levels fed buying interest.

Gasoline has led a three-day oil market rally as thin supplies ahead of the summer driving rush spark higher prices.

Adding further support was unrest in the Middle East and doubts the Organization of Petroleum Exporting Countries (OPEC) will raise crude output when it meets June 5-6.

Vice President Richard Cheney said on Sunday that the lack of U.S. refinery capacity and not OPEC production levels are at the root of America's energy problems, which have pushed retail gasoline prices to record highs.

``We think the best way to proceed...is to make sure we address our own problems here at home,'' Cheney said on NBC's ''Meet the Press'' television program.

Although U.S. refiners are running at 93.5 percent of capacity according to the last American Petroleum Institute (API) data, outages and maintenance shutdowns have slowed the buildup of gasoline stocks.

Gasoline was leading the oil markets on tight supplies ahead of peak demand driving season starting later this month.

Gasoline futures stood at $1.084 per gallon, a gain of 1.5 cents over Friday's New York settlement of $1.069, a gain of 4.78 cents.

While gasoline stocks have risen to nearly two million barrels over last year's slim levels, demand is also expected to be higher. Travel industry surveys last week showed that more Americans plan to drive to vacation this year than last.

U.S. retail gasoline prices hit a record high of $1.713 a gallon earlier this month, up 22 cents from a year ago.

Growing tensions in the Middle East, a region of heavy oil production, are also helping to support prices on fears that the fighting could disrupt oil flow.

U.S and British planes reportedly bombed areas in southern Iraq, and Israeli warplanes have attacked targets on the West Bank in recent days.

U.S. light sweet crude stood at $30.15 per barrel, up 24 cents from Friday's New York settlement of $29.91, when it gained $1.00 and reached a three-month high.

OPEC President Chakib Khelil said on Sunday the cartel was unlikely to adjust output at its next meeting given current market fundamentals.

``People are not really for an increase in June,'' Khelil, Algeria's oil minister, told reporters. ``My hunch is we'll agree on letting the (price band) mechanism take its course.''

OPEC has an informal agreement whereby output can be raised by 500,000 barrels per day (bpd) if the price of the cartel's basket of seven crudes trades above the $22-$28 per barrel range for more than 20 consecutive days.

The oil cartel cut output by 2.5 million bpd earlier this year in a bid to defend its preferred target price of $25 a barrel.

``OPEC must respond to crude, not petroleum products,'' Khelil said. ``Increasing crude supplies won't solve the problem ... and it may come back to haunt us.''

Qatari Energy Minister Abdullah bin Hamad al-Attiyah and Iranian Oil Minister Bijan Zanganeh voiced similar opinions over the weekend.

-- (in@energy.news), May 22, 2001