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Oil Prices Climb Above $56 a Barrel As Domestic Supply Shrinks, OPEC Decision Shrugged Off
AP via Yahoo! ^ | June 15, 2005 | Brad Foss

Posted on 06/15/2005 9:55:28 AM PDT by Brilliant

WASHINGTON (AP) -- Oil prices rose by more than $1 a barrel Wednesday after energy traders shrugged off OPEC's decision to raise its output target by half a million barrels and the Energy Department said domestic supplies shrank last week amid rising demand for gasoline.

President Bush delivered a speech on Wednesday highlighting the need for greater energy efficiency to reduce the country's dependence on foreign sources of fuel.

Light sweet crude for July delivery rose $1.50 to $56.50 per barrel in midday trade on the New York Mercantile Exchange. In London, Brent crude futures rose 77 cents to $54.50 a barrel on the International Petroleum Exchange.

The Energy Department's weekly supply snapshot showed U.S. inventories of crude oil fell by 1.8 million barrels last week to 329 million barrels. Still, supplies are almost 9 percent above year ago levels.

The agency said gasoline inventories slipped by 900,000 barrels to 215.7 million barrels, or 5 percent higher than a year ago. The supply of distillate fuel, which includes diesel and heating oil, grew by 2.5 million barrels to 110.2 million barrels, or 1 percent above year ago levels.

Also on Wednesday, the Organization of Petroleum Exporting Countries agreed to increase its official production quota from 27.5 million barrels a day to 28 million barrels per day, and members said they would consider another 500,000 barrel per day increase if prices remained high.

Analysts said OPEC's decision would have little impact on actual output.

The 10 OPEC members bound by the output quota are already pumping some 28 million barrels a day. Including Iraq, which is not bound by the quota, OPEC's production was 29.3 million barrels a day in May, according to the International Energy Agency.

"OPEC is producing flat out. They have nothing left in the tank," said oil analyst Fadel Gheit at Oppenheimer & Co. in New York.

Gheit said OPEC officials are somewhat justified in pointing the finger at the United States and the rest of the world for not adding enough refining capacity to keep up with growing demand. Still, he said the U.S., the world's largest energy consuming nation, has proven that its economy can grow in spite of the high price of oil due to efficiency gains made in recent decades.

President Bush, speaking at an energy conference in Washington, said the country needed to make further gains in energy efficiency -- as well as produce and refine more oil at home -- in order to make the country less dependent on foreign fuel sources. He prodded Congress to pass an energy bill this summer.

"The American people know that an energy bill will not change the price of gas immediately, but they're not going to tolerate inaction in Washington as they watch the problem grow worse," he said.

The Energy Department said Monday that retail gasoline prices average $2.13 per gallon nationwide, an increase of almost 40 percent in the past two years. The agency said Wednesday that demand over the past four weeks was 3 percent higher than a year ago.


TOPICS: Business/Economy
KEYWORDS: economy; energy; gas; oil; opec
Why are the Dems and RINOs blocking the energy bill?
1 posted on 06/15/2005 9:55:28 AM PDT by Brilliant
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To: Brilliant

Heard on the news this a.m. that OPEC will increase supply 500,000 gallons per day for an overall increase of 28 millions gallons per day is reached.


2 posted on 06/15/2005 9:57:26 AM PDT by lilylangtree
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To: Brilliant

What we need are more refineries. Producing more oil means nothing if you can't refine it. The EPA should just be disbanded. In fact they should just be taken out and shot.


3 posted on 06/15/2005 9:57:41 AM PDT by speed_addiction ( Somethings gnaw on a man worse'n dyin'!)
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To: Brilliant

They probably see it as a back door approach to Kyoto. oil gets expensive, BTU get expensive, and we are forced to conserve.


4 posted on 06/15/2005 9:58:02 AM PDT by ARCADIA (Abuse of power comes as no surprise)
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To: Brilliant

*BUMP*!


5 posted on 06/15/2005 9:58:35 AM PDT by ex-Texan (Mathew 7:1 through 6)
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To: Brilliant
If Matthew R. Simmons, author of the new book Twilight in the Desert: The Coming Saudi Oil Shock and the World Economy, is right, we are already in big trouble.
6 posted on 06/15/2005 10:14:13 AM PDT by megatherium
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To: Brilliant

Fact, no one is going to build a new refinery until there is a new supply of oil to put through it.
Fact, OPEC is at its peak and cannot increase production.
What is going to happen now is just like this article. Everybody is going to blame everybody else.


7 posted on 06/15/2005 10:19:27 AM PDT by jec41 (Screaming Eagle)
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To: Brilliant

Diden't the democRATS won't high oil prices so people would drive less. Like $4.00 gal tax.


8 posted on 06/15/2005 10:21:34 AM PDT by G-Man 1
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To: Brilliant

We can use other energy sources cheaper at this price. The current price is not sustainable.


9 posted on 06/15/2005 10:23:00 AM PDT by B Knotts
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