Crude prices extend gain on supply fears, OPEC

Crude prices extend gain on supply fears, OPEC

Dubai (Platts)--25Apr2005


Global crude prices extended gains Monday on gasoline supply concerns and on
fears that OPEC may not increase production in the near future. Light, sweet
US West Texas Intermediate crude for June delivery traded at $55.67/bbl at
1155 GMT, up 28 cts from Friday's settlement at $55.39/bbl on the New York
Mercantile Exchange. North Sea Brent crude for June traded at $55.36/bbl
Monday, up 39 cts from Friday's International Petroleum Exchange settlement at
$54.97/bbl. WTI and Brent have spiked on gasoline supply concerns spurred by
US Department of Energy data reporting a 1.5-mil bbl draw in stocks as
refiners produced more distillates at the expense of gasoline and as the US
heads into the peak demand summer driving season. US refinery glitches have
also lent upward support to global crude prices, traders said. ConocoPhillips
has failed to restart a 48,000 b/d fluid catalytic cracker at its Lake
Charles, Louisiana, refinery.

Crude prices also rallied on comments by Saudi Arabia's oil minister Ali Naimi
in the Saudi-owned daily al-Hayat newspaper. In the interview Friday, Naimi
said his country would raise output in the third quarter of this year to help
stocks build in preparation for expected higher demand in the last quarter of
the year. Saudi Arabia is currently pumping 9.5-mil b/d of crude, enough to
meet oil demand in the US and elsewhere, Naimi said. His comments contrasted
with remarks from OPEC President Sheikh Ahmed Fahed al-Sabah earlier in the
week that OPEC would unofficially increase output in May, but would defer
further any increase in its formal production quotas until a June meeting.
Nigeria's top oil official Edmund Daukoru also said Friday he saw no need for
OPEC to boost actual output before the June meeting while crude prices are at
a "comfortable $50/bbl." Naimi has also said Saudi Arabia is not responsible
for the latest price rise.

The market has also turned its focus on US President George W Bush's meeting
with Saudi Crown Prince Abdullah and Naimi later Monday. The talks are
expected to focus on the stalled Middle East peace process and crude prices,
AFP reported. A sensitive topic will be soaring oil prices in the US, which
experts blame in part for the sharp drop in Bush's approval ratings--to his
lowest level in some polls since taking office in January 2001, AFP said. Bush
has said he does not have a "magic wand" to lower prices at the pump, but he
has seemed to question Saudi statements over the kingdom's level of spare
capacity. "I don't think they're pumping flat out," the president told CNBC
television this week. "I think they're near capacity, and so we've just got,
got to get a straight answer from the government as to what they think their
excess capacity is."

This story was originally published in Platts Global Alert
http://www.globalalert.platts.com

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