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INTERNATIONAL concern mounted as world oil prices
edged closer to
$120 a barrel Wednesday, and the world’s top producer called for
calm.
Analysts said a weakening US
dollar, supply worries in Nigeria and the reluctance of the
Organization of Petroleum Exporting Countries (OPEC) to increase
output have all contributed to the price surge.
New York’s main oil futures
contract, light sweet crude for delivery in June, rose four cents to
$118.11 a barrel.
The May contract expired on
Tuesday after closing at a record $119.37 a barrel at the New York
Mercantile Exchange, where it earlier hit an all-time intraday peak
of $119.90.
Global supply jitters have seen
oil contracts traded in New York spike by more than $57 in the past
year. Price records in New York and London have been broken almost
daily over the past week.
Brent North Sea crude for June
delivery rose five cents to $116 a barrel, after settling at an
all-time high of $115.95 on Tuesday in London.
The contract earlier touched a
record $116.75 in intraday activity.
“Market sentiment is bullish in
the immediate term,” said Victor Shum, senior principal of Purvin
and Gertz energy consultancy in Singapore.
“The weak US dollar, real
supply disruption in Nigeria . . . are pushing prices higher.”
But Shum said there is increasing
concern that the rally in oil pricing “has been too much and too
fast.”
Ministers from 74 countries
attending the International Energy Forum in Rome on Tuesday said oil
prices should be at levels acceptable to producers and consumers,
“to ensure global economic growth, particularly in developing
countries.”
US President George W. Bush
expressed concern at the impact of high price levels on consumers.
Saudi Arabia’s petroleum
minister, Ali al-Naimi, called for calm in the face of runaway oil
prices Tuesday. He said the world is not running out of oil.
The root of the problem was
primarily due to “limited capacity along the entire supply chain .
. . at its heart, this is not an energy resource issue; it is
primarily an investment issue,” he said at the Rome forum.
Saudi Arabia is the biggest
producer in OPEC, which said Tuesday it plans to increase its
production capacity by five million barrels per day by 2012.
The cartel’s Secretary General
Abdalla Salem El-Badri said OPEC aimed to boost production capacity
by nine million barrels per day by 2020. Current OPEC output stands
at about 32 million.
Shum said OPEC’s move would
have little impact in the near term.
“Even though OPEC has promised
to increase production capacity, the long-term supply increase does
not resolve the main factors that are underpinning prices now,” he
said.
A weakening US dollar has spurred
oil demand because dollar-priced oil becomes cheaper for buyers
holding stronger foreign currencies.
The euro surged to a record
$1.6002 on Tuesday on renewed jitters about the US economy.
Global supply worries were stoked
after Anglo-Dutch oil group Royal Dutch Shell reported an output
loss of 169,000 barrels a day from sabotage of its key pipelines in
southern Nigeria.
Shell said Monday that it might
not be able to honor oil contracts for April and May after the
attacks.
-AFP
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