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 Business News | April 2005 
Oil Tops $58; OPEC Discusses Output Rise
 Reuters
London - Oil prices raced to all-time peaks Monday, climbing above $58 a barrel, while OPEC producers said they had begun discussing a second output rise to try to quell the market's rally.
U.S. light crude for May delivery on the New York Mercantile Exchange (CLc1) hit a record $58.18 a barrel, up 91 cents on the day. London's Brent crude (LCOc1) traded $1.14 higher at $57.65.
NYMEX crude oil for September delivery (CLU5) -- trading at a premium to the front month -- hit $60.05, the first time a futures contract has topped $60.
Prices have surged since a forecast last week by Goldman Sachs bank that prices could spike above $100 as global demand growth strains supply capacity.
OPEC President Sheikh Ahmad al-Fahd al-Sabah said Monday cartel oil ministers had begun telephone consultations on possibly increasing production by a further 500,000 barrels per day to cool prices.
"If there is a decision it should be in the next two weeks. For that, if there will be any new production, it should be in May," Sheikh Ahmad, who is Kuwait's energy minister, added.
The Organization of the Petroleum Exporting Countries raised output limits by 500,000 bpd to 27.5 million bpd in mid-March and left room for a second rise before a June ministerial meeting if prices failed to ease below $55.
Apart from Goldman's forecast of a very sharp spike higher, the European Commission Monday said it had raised its 2005 price forecast to $50.9 a barrel for Brent, up from an earlier forecast of $45.1.
More OPEC Oil?
Nigerian Presidential Adviser on Petroleum Edmund Daukoru said Sunday the increase could happen within two weeks if prices stayed above $55 for at least the next 10 to 14 days.
"They shrugged off the first one but it will be more difficult for them to shrug off the second one," Daukoru said, referring to the market reaction to OPEC's output rise.
An OPEC delegate said Monday the group's 10 members under formal output limits, excluding Iraq, would pump 28.1 million bpd in April, which is about 400,000 bpd above estimated March production and 600,000 bpd higher than the current ceiling.
U.S. oil prices have surged by more than 30 percent this year, with big-money speculative funds buying heavily on signs that robust demand growth in Asia's emerging economies and the United States would strain world supply.
Non-OPEC producers are pumping at full tilt and have little spare capacity to offer the market. Russian data released on Monday showed the world's second-biggest exporter pumping 9.33 million bpd in March, steady from February.
It was the sixth month in a row that output had failed to rise and another sign of a slowdown in Russia's industry.
Concerns about the adequacy of U.S. gasoline stocks ahead of the peak summer demand season have also driven price strength after a handful of refiners have had production problems.
U.S. gasoline futures (HUc1) struck an all-time high on Monday of $1.7491 a gallon, later easing slightly to $1.7470, up 1.60 cents. |
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