Crude futures held above $54 a barrel on Monday even after members of the Organisation of Petroleum Exporting Countries (Opec) assured traders that the cartel will not likely cut production, and that some members might pump above their output quotas, to cool down overheated markets.
Light, sweet crude for April delivery rose by six cents to $54,49 a barrel in electronic trading on the New York Mercantile Exchange by late morning in Europe. Heating oil fell more than a cent to $1,5315 a gallon (3,8 litres).
Brent crude climbed 19 cents to $53,29 on London’s International Petroleum Exchange.
Nymex crude futures have traded at about $55 a barrel ahead of Wednesday’s Opec meeting in Isfahan, Iran.
The United Arab Emirates’ Oil Minister, Mohammed bin Dhaen al-Hamili, said on Sunday that the producer group is not expected to cut its output ceiling and may ”maintain current production levels with the aim of calming the market”.
Hamili’s comments were in line with Kuwait Oil Minister Sheik Ahmed Fahd Al Ahmed Al Sabah’s acknowledgment a day earlier that the surge in oil prices has made some members consider exceeding their quotas.
”I think that now everybody is overproducing,” said Al Sabah, who is also Opec’s president. ”Current prices make it lucrative for everybody to hike production without the need for an [official] decision.”
Neither minister saw signs of tightening oil supplies, and Hamili suggested stockpiles could even increase by two million barrels per day during the second quarter. Oil inventories typically rise then as demand declines following the northern-hemisphere winter.
Victor Shum, an oil analyst at Texas-based Purvin & Gertz in Singapore, said prices will stay above the $50 barrel level.
”The strength of demand means that any downward correction would not be significant,” he said.
The Paris-based International Energy Agency, a watchdog for the Organisation for Economic Cooperation and Development, said on Friday that it expects world oil demand growth of 1,81-million barrels a day, bringing its forecast for average daily demand to 84,3-million barrels.
In raising its demand forecast by 330 000 barrels a day from earlier estimates, the International Energy Agency cited a cold snap in late February and early March in the United States and Europe, a sunnier outlook for US economic growth, and higher demand from China. — Sapa-AP