- Crude oil futures prices rose above $55 a barrel Wednesday,
anchored by a weak dollar, strong demand and jitters ahead of next week's
meeting of the Organization of Petroleum Exporting Countries.
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- Analysts said the rally is also speculative in nature,
though they conceded that prices were likely to remain high so long as
the global economy continues to grow.
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- "There is no shortage anywhere," said James
Cordier, president of Liberty Trading Group in St. Petersburg, Fla.
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- OPEC oil ministers have signaled they will not raise
output - a stance that analysts said was not surprising considering the
organization already is producing over its quota.
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- And even a decision to boost production at the meeting
in Iran on March 16 would come too late to compensate for the late outburst
of wintry weather in the Northern Hemisphere that is driving demand for
heating oil. Cordier said the recent cold weather is no doubt fueling the
rally in oil futures, but he believes that factor will dissipate soon with
spring around the corner.
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- "Supplies in the U.S. are at very comfortable levels
coming out of the heating season and months before the driving season,"
Cordier said.
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- In the U.S. government's latest petroleum supply report,
inventories of crude oil rose, as expected, while supplies of gasoline
and distillate fuel, which includes heating oil, showed modest declines.
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- On the New York Mercantile Exchange, light, sweet crude
rose 81 cents to $55.40 a barrel in afternoon trade. The highest Nymex
settlement price on record was $55.17 per barrel, set twice in late October.
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- While oil futures are 53 percent higher than last year,
prices would have to surpass $90 per barrel to meet the inflation-adjusted
peak set in 1980.
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- Brent crude was up 41 cents at $53.25 a barrel on the
International Petroleum Exchange.
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- The 10 OPEC countries bound by production quotas pumped
an estimated 700,000 barrels a day last month above their joint 27 million
barrel ceiling.
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- With the organization unlikely - or unable - to go much
above that, "we need the weather to get warmer," said analyst
Deborah White at SG Securities in Paris.
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- "OPEC cannot help that we're getting major snowstorms
in the (U.S.) Northeast - even if they had more capacity they can do nothing
to put more heating oil in the Northeast instantaneously."
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- Also driving prices higher was the strong euro, which
rose above $1.33, its highest level since early January.
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- Because crude is sold worldwide in U.S. dollars, and
because the currency has lost 8 percent of its value against the euro in
the last four months, OPEC nations have signaled support for higher oil
prices as a hedge to maintain their buying power in Europe.
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- Several OPEC ministers have said they see no need to
raise output.
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- "The most OPEC can do in Isfahan is roll over production
for a short period and to have another extraordinary meeting," Iranian
oil minister Bijan Zanganeh said in Tehran on Tuesday.
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- Venezuela, Qatar and Algeria have all come out against
raising output, and OPEC President Sheik Ahmed Fahd Al Ahmed Al Sabah of
Kuwait said Sunday that although prices were high, the market was well
supplied.
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- The U.S. Energy Department's weekly petroleum supply
report showed inventories of crude oil rose last week by 3.2 million barrels
to 302.6 million barrels, or 9 percent above year ago levels.
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- The nation's inventory of gasoline declined by 200,000
barrels to 224.3 million barrels, or 11 percent above year ago levels,
the agency said. The supply of distillate fuel, which includes heating
oil and diesel, shrank by 800,000 barrels to 109.2 million barrels, or
1 percent below year ago levels.
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- Associated Press Writers George Jahn in Vienna, Austria
and Wee Sui Lee in Singapore contributed to this report.
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