Oil Slips to $54 After Saudi Assurance ($54.18/bbl)

Reuters ^ | April 26, 2005 | Mia Shanley

[RWR8189]

LONDON (Reuters) - Oil prices eased for a second day on Tuesday as traders booked profits from a week-long rise after Saudi Arabia said it could quickly tap spare oil production capacity if necessary.

U.S. light crude last traded down 31 cents to $54.26 a barrel, extending Monday's 82-cent loss in New York. London Brent crude was down 9 cents to $54.31.

Prices were dampened by renewed signs of rising OPEC supply and comments from the world's leading exporter Saudi Arabia that it was ready to tap spare capacity if buyers needed more oil.

OPEC oil producers are pumping 30.4 million barrels per day (bpd) in April, up 700,000 bpd from March, leading tanker tracking consultancy Petrologistics said on Tuesday.

Petrologistics' preliminary estimate for the month would put OPEC April supply above the 25-year output high hit last September and October. During those months, supply rose to 30.15 million bpd, according to Reuters surveys.

Adel al-Jubeir, foreign affairs adviser to Saudi Arabia's Crown Prince Abdullah, said after a meeting between President Bush and Abdullah in Texas that world oil supplies were adequate, but the kingdom was willing to provide as much crude oil as buyers wanted.

The kingdom is producing slightly over 9.5 million bpd, with between 1.3 million and 1.4 million bpd in spare production capacity that could quickly be tapped, Jubeir said.

Saudi Arabia is expected to provide most of a 500,000-bpd supply increase in OPEC supplies next month, the cartel's President Sheikh Ahmad al-Fahd al-Sabah, said last week.

"The Saudi comment has had an affect. Also, the market is struggling to push much higher without any substantial change in supply, shock news or increasing demand," said Daniel Hynes, a commodities analyst at ANZ Bank in Melbourne.

While many analysts see sufficient supplies of crude oil and products in the short term they remain wary about constraints on global refining capacity and a possible shortage of products later in the year.

A spate of technical glitches in Louisiana, Texas and Kansas has raised fears that refineries may struggle to meet an expected rise in gasoline demand this summer.

U.S. gasoline stocks probably declined by 800,000 barrels as implied demand held strong while production likely dipped and imports dropped, industry analysts said on Monday.

U.S. commercial crude inventories likely rose by 400,000 barrels last week as imports rebounded, analysts said. The U.S. government will release weekly inventory data on Wednesday.

Qatar's Oil Minister Abdullah al-Attiyah said on Monday OPEC was doing everything it could to bring down oil prices. "If there is a need to increase production in June and we believe the market needs it, I think OPEC will go ahead," he said.

OPEC is next scheduled to meet to discuss production policy on June 15 in Vienna.

 

[RWR8189]

4/26/05 Session Contract Detail for June 2005

	Last				54.18
	Open High				54.34
	Open Low				54.34
	High				54.34
	Low				54.06
	Settle				54.57
	Change				-0.39
	Open Interest				256670
	Volume				0
	Last Updated				4/25/05 15:51:59

[Flavius]

phew thanks for that .18 cents

[reformedliberal]

"...the market is struggling to push much higher without any substantial change in supply, shock news or increasing demand,..."

"While many analysts see sufficient supplies of crude oil and products in the short term they remain wary about constraints on global refining capacity and a possible shortage of products later in the year. A spate of technical glitches in Louisiana, Texas and Kansas has raised fears that refineries may struggle to meet an expected rise in gasoline demand this summer. U.S. gasoline stocks probably declined by 800,000 barrels as implied demand held strong while production likely dipped and imports dropped, industry analysts said on Monday. U.S. commercial crude inventories likely rose by 400,000 barrels last week as imports rebounded, analysts said. The U.S. government will release weekly inventory data on Wednesday."

I may fall and suffer injuries in a few months that will prohibt me from producing my inventory. Should I raise prices now on that expectation?< /sarcasm >

Was there ever a change over period that did not see "a spate of technical glitches"?

So, will we get hard figures tomorrow, or more speculation to feed the speculation? Are there provisions for more refineries and storage in the energy bill? And how will that influence *global* capacity? Since imports *likely* dropped, has this made any impact on the trade deficit for the week?

I smell self-serving futures and options traders and their minions in the media.