Crude futures rose on Monday ahead of a meeting between United States President George Bush and Saudi Crown Prince Abdullah that will focus in part on possible ways to bring down high oil prices.
Analysts said that a rash of refinery outages in the US and Venezuela underpinned the bullish market, along with stronger-than-expected stock draws on crude and a perception that neither producers nor oil companies are willing to go beyond present measures to bring prices down.
Light, sweet crude for June delivery on the New York Mercantile Exchange was up by 26 cents at $55,65 a barrel by afternoon in Europe. Heating oil was up by half a cent at $1,5515 a gallon (3,8 litres), while unleaded gasoline rose nearly a cent to $1,6610 a gallon.
In London, Brent crude was up 43 cents at $55,40 on the International Petroleum Exchange.
Bush has promised to press Abdullah during Monday’s meeting in Texas to do more to help ease global oil prices. But he has acknowledged there may be little the Saudis can do in the short term.
As the world’s top oil exporter and leading member of the Organisation of Petroleum Exporting Countries, Saudi Arabia now pumps about 9,5-million barrels daily.
Saudi Oil Minister Ali Naimi promised last week to increase production capacity from the current limit of 11-million barrels a day to 12,5-million barrels by 2009 and possibly 15-million barrels after that.
Bush’s agenda on Monday will also include solutions to curb terrorist acts in the Saudi kingdom, which have prompted fresh fears of a supply disruption, causing prices to surge.
In Saudi Arabia, suspected militants linked to al-Qaeda clashed with security forces on Thursday. Two extremists and two police officers were killed.
Victor Shum, oil analyst at Texas-headquartered Purvin & Gertz in Singapore, said the meeting will likely ease prices as ”the Saudis are sending signals that they are doing their part to increase supply”.
But other analysts suggested reassuring words from the Saudi-US meeting may not be enough at a time of bullish market fundamentals.
In Vienna, PVM energy consultants linked the recent rise in prices to a ”series of refinery glitches [and] quite bullish US stock data” combining to ”paint a picture of downstream tightness and high volatility”.
In a newsletter, the company said that last week’s shootout with Saudi militants also added to market jitters.
SG Securities analyst Deborah White in Paris said the perception that ”everyone is saying we are doing all we can” — producers, as well as oil companies — sends a message that no one is willing to embark on new initiatives to bring prices down.
Crude prices hit an intraday high of $58,28 at the beginning of April before falling back to about $50 per barrel in recent sessions, and then rising again.
Traders are concerned that falling gasoline inventories and reported refinery outages in the US could drive prices higher as the summer driving season in the northern hemisphere approaches.
The US government weekly report showed gasoline inventories declining by 1,5-million barrels to 211,6-million barrels, or 5% above year-ago levels.
But Shum was confident that gasoline supplies will be enough to meet demand.
”Gasoline inventories in the US are higher than last year’s levels, so traders shouldn’t worry too much about it,” he said. — Sapa-AP
Associated Press writer Wee Sui Lee contributed to this story from Singapore