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Oil supplies up as price tops 51 dollars Original Source Link: (May no longer be active)
http://www.reuters.com/newsArticle.jhtml?type=businessNews&storyID=7732119http://www.reuters.com/newsArticle.jhtml?type=businessNews&storyID=7732119
Oil Extends Rally Despite Rising Supply
Thu Feb 24, 2005 03:53 PM ET
NEW YORK (Reuters) - Oil extended gains over $51 a barrel on Thursday as concern that OPEC was becoming comfortable with prices near $50 countered swelling stockpiles in the United States, the world's largest energy consumer.
U.S. crude oil (CLc1: Quote, Profile, Research) rose 22 cents to $51.39 a barrel on the New York Mercantile Exchange, after peaking at $52.05 during the open call session, the highest level since Nov. 1.
Prices are now nearly $4 from the record high of $55.67 hit in late October.
London Brent crude (LCOc1: Quote, Profile, Research) gained 93 cents to $49.44 on the International Petroleum Exchange.
The strength came after Saudi Oil Minister Ali al-Naimi said on Thursday he expected crude prices to stay between $40 and $50 throughout this year -- a signal the OPEC cartel may not be committed to cooling the red-hot market.
"Where the price is today, between $40 and $50, will probably be with us throughout 2005," Naimi told CNBC television in an interview.
"I'm always reluctant to make a prediction as to what the price is, but just looking at fundamentals -- inventories, supply, demand and the worldwide desire for a stable oil market -- I believe it will be in this band."
In the past, members of the Organization of Petroleum Exporting Countries had called crude oil prices near $50 too high. The cartel, which controls about 40 percent of global oil exports, next meets March 16 in Iran.
Venezuela's energy minister, Rafael Ramirez, said Thursday OPEC should maintain current oil output limits.
The price gains came despite a U.S. government report showing continued increases in already robust crude oil and gasoline inventories, and smaller-than-expected decreases in distillate stockpiles.
Oil supplies rose 600,000 barrels last week, while gasoline inventories grew 1.8 million barrels and distillates inventories slipped 700,000 barrels, according to the U.S. Energy Information Administration.
The U.S. Department of Energy said in a separate report it expected a year-on-year gasoline supply surplus to grow to more than 11 percent by the end of May, the traditional start of the summer driving season.
"I don't think this will be enough to break the back of the rally," said Phil Flynn of Alaron Trading in Chicago.
Crude prices have soared by about $5 in the past two weeks as continued strong demand growth, disappointing supply forecasts and cold Northern Hemisphere weather spurred a renewed surge of buying from big-money speculative funds.
The rally has gathered pace as a steep fall in the dollar -- the currency of international oil trade -- spurred funds to switch money out of foreign exchange markets and into commodities such as energy, metals and coffee.
The OPEC cartel has said if prices rise further it may look to cool the market by raising output, but the growth in global consumption has undermined OPEC's ability to lower prices.
The cartel is already producing close to capacity, leaving little cushion to cope with supply problems.
The upward price strength overshadowed Chinese data showing January crude imports fell to the lowest level in 14 months, down 24 percent on last year.
China increased crude imports rapidly last year in an effort to cope with soaring demand for transport fuel and power generation.
Heating oil futures in New York settled down 1.81 cents to $1.4650 a gallon and gasoline settled down 2.76 cents to $1.2838 a gallon.
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