Oil Prices Slip As Bush Meets Saudi Prince
Associated Press | April 25, 2005
By GEORGE JAHN
Crude oil futures slipped Monday as President Bush and Saudi Crown Prince Abdullah met, in part, to discuss possible ways to bring down high oil prices.
Light, sweet crude for June delivery was down 42 cents at $54.97 a barrel in afternoon trading on the New York Mercantile Exchange. Heating oil futures were down nearly a cent at $1.536 a gallon, while unleaded gasoline climbed 2.37 cents to $1.676 a gallon.
In London, Brent crude was down 10 cents at $54.90 on the International Petroleum Exchange.
Bush has promised to press Abdullah during Monday's meeting in Texas to do more to help ease global oil prices. But he has acknowledged there may be little the Saudis can do in the short term.
As the world's top oil exporter and leading member of the Organization of Petroleum Exporting Countries, Saudi Arabia now pumps about 9.5 million barrels daily.
Saudi Oil Minister Ali Naimi promised last week to increase production capacity from the current limit of 11 million barrels a day to 12.5 million barrels by 2009 and possibly 15 million barrels after that.
Bush's agenda on Monday will also include solutions to curb terrorist acts in the Saudi kingdom, which have prompted fresh fears of a supply disruption, causing prices to surge. In Saudi Arabia, suspected militants linked to al-Qaida clashed with security forces Thursday. Two extremists and two policemen were killed.
Victor Shum, oil analyst at Texas-headquartered Purvin & Gertz in Singapore, said the meeting will likely ease prices as "the Saudis are sending signals that they are doing their part to increase supply."
But other analysts suggested reassuring words from the Saudi-U.S. meeting may not be enough at a time of bullish market fundamentals.
In Vienna, PVM energy consultants linked the recent rise in prices to a "series of refinery glitches, (and) quite bullish U.S. stock data," combining to "paint a picture of downstream tightness and high volatility." In a newsletter, the company said that last week's shootout with Saudi militants also added to market jitters.
SG Securities analyst Deborah White in Paris said the perception that "everyone is saying we are doing all we can" — producers, as well as oil companies — sends a message that no one is willing to embark on new initiatives to bring prices down.
Crude prices hit an intraday high of $58.28 at the beginning of April before falling back to about $50 per barrel, and then rising again.
Traders are concerned that falling gasoline inventories and reported refinery outages in the United States could drive prices higher as the summer driving season in the Northern Hemisphere approaches.
The U.S. government weekly report showed gasoline inventories declining by 1.5 million barrels to 211.6 million barrels, or 5 percent above year-ago levels.
But Shum was confident that gasoline supplies will be enough to meet demand.
"Gasoline inventories in the U.S. are higher than last year's levels, so traders shouldn't worry too much about it," he said.
Associated Press Writer Wee Sui Lee contributed to this story from Singapore.