Oil prices rise
NEW YORK (AP) – Crude futures edged up on Monday, as traders responded to speculation that U.S. refineries might be unable to match demand in the latter half of the year. With little economic news on Monday to direct the markets, light, sweet crude futures for June delivery hovered around the $51 mark. Crude rose 34 cents to $51.30 per barrel in midday trading on the New York Mercantile Exchange.
Unleaded gasoline rose a cent to $1.4770 a gallon, while heating oil was slightly higher at $1.4320 a gallon.
On London’s International Petroleum Exchange, June Brent crude futures edged up 12 cents to $50.89 a barrel.
Nymex crude prices, which have been highly volatile in the past weeks, are down about $7 from their all-time high of $58.28 on April 4.
Phil Flynn, analyst at Alaron Trading Corp. in Chicago, said it appears the market is trying base at around $50 and gain momentum to rise again.
“For the market to continue its rally up, it needs to be reassured that the economy’s recovering,” Flynn added. “We’re going to be very macroeconomically-focused on this crude oil market.”
Some analysts remain concerned over U.S. refineries’ ability to boost output ahead of summer – and the traditional driving season in the United States – while also looking toward its heating oil production for winter.
The United States is the world’s largest consumer of crude oil.
“Market bulls scoff at every bearish signal in the data because they are convinced the second half will be tight, no matter how much oil OPEC pours onto the market in advance,” said Energyintel analyst Peter Kemp. “The longer the market sticks to its current range, the more $50 comes to look like a price floor, rather than a ceiling that is occasionally breached.”
The Organization of Petroleum Exporting Countries raised its production ceiling by 500,000 barrels in March to nearly 30 million barrels daily, in an effort to boost stocks and steady prices ahead of summer.
The cartel’s president, Sheik Ahmed Fahd Al Ahmed Al Sabah, said OPEC would not raise output, Dow Jones Newswires reported Monday. Al Sabah said there was excess capacity, and that recent oil price volatility was partly due to fears of insufficient supply in the future – not current supply issues.
“I would like to emphasize that OPEC is able to provide oil quantities to the market and is able to cover global oil demand in the short term,” Al Sabah said, according to Dow Jones.
OPEC produces about 40 percent of the world’s daily oil supply, and instability in member countries helped pushed prices upward in 2004.
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Associated Press Writers Edith Balazs in Budapest, Hungary, and En-Lai Yeoh in Singapore contributed to this report.
AP-ES-05-09-05 1338EDT