Crude Prices Climb Past $52 Mark
Associated Press | June 1, 2005
By GEORGE JAHN
VIENNA, Austria -- Crude oil futures climbed past the $52 mark on Wednesday, suggesting that expectations for modest builds in crude and gasoline supplies in the next U.S. inventory data report were already factored into the market.
Analysts said the report would have to show substantial growth in stocks to bring prices down, adding that the hospitalization of Saudi ruler King Fahd might also have been putting upward pressure on prices over the past few days. Longer term, they said the market would be choppy until the fall, with its increased heating oil demands driving up prices.
Light, sweet crude for July was up 43 cents to $52.40 a barrel on the New York Mercantile Exchange in Europe. Heating oil rose more than 1 1/2 cents to $1.4655 a gallon, while unleaded gas rose a nearly a cent to $1.4764 a gallon.
In London, Brent crude was up 45 cents on the International Petroleum Exchange, at $51.18 a barrel.
In mid-May, prices fell below $47 a barrel in response to steadily rising crude inventories, but last week's surprise drop in U.S. oil supplies brought nervousness back into the market.
"For a few weeks now, the market has become more difficult to predict and last week's drop just reiterated that," said Daniel Hynes, energy analyst at ANZ Bank in Melbourne, Australia.
Oil prices are about 23 percent higher than a year ago.
The U.S. Energy Information Administration's last petroleum data showed that U.S. commercial crude oil inventories fell 1.6 million barrels to 332.4 million barrels in the week ending May 20 from the previous week.
Still, Hynes said he expects a "slight rise" in crude inventories in the report released Thursday, a day later than normal due to Monday's Memorial Day holiday in the United States.
"Anything less than that, we'll definitely see an upward impact on the prices," he said.
In Vienna, PVM Oil Associates also predicted a build in stocks.
"Crude and gasoline stocks are foreseen to add roughly 200,000 barrels, while distillates stocks could rise by close to 1 million barrels, following the seasonal restocking pattern," it said in its daily energy market report.
Peter Gignoux, a London-based oil adviser for GDP Associates in New York, said stock increases will likely "continue until people start drawing gas" as the U.S. driving season unfolds.
Longer term, "we (are) going to be to-ing and fro-ing for most of the summer and firm up as we go into autumn," he said.
On Tuesday, prices inched higher after Venezuela's oil minister Rafael Ramirez said the Organization of Petroleum Exporting Countries should cut its official oil production quota or leave it unchanged at the group's next meeting.
Venezuela is the world's fifth-largest oil exporting country, a founding member of OPEC and steady supplier of fuel to the United States.
The OPEC ministers are scheduled to meet in Vienna on June 15. The cartel has been pumping at 25-year highs in an attempt to keep prices in check.
Hynes added that most traders don't seem to be too concerned about comments from the OPEC ministers, and expect the group to maintain current output levels to meet demand in the fourth quarter.