Posted on 05/30/2006 8:08:20 AM PDT by thackney
Oil rose above $72 a barrel on Tuesday, boosted by a jump in demand in energy-hungry China and continued tension between Iran and the West over Tehran's nuclear programme.
The rally came despite an assurance from OPEC, source of more than a third of the world's oil, that it will do all it can to keep consumers well-supplied when oil ministers meet in Caracas on Thursday.
"We're still in this bullish mode and people are looking for bullish headlines," said analyst Deborah White of SG CIB Securities in Paris. "Between China and Iran, if you pick and choose, you had two."
U.S. crude for July delivery was up $1.12 at $72.49 a barrel by 1305 GMT. London Brent crude gained $1.16 to $71.75. Both markets were closed on Monday for holidays.
Oil in New York has fallen from a record high of $75.35 reached in April partly on worries that high prices will accelerate inflation and slow growth in demand for oil.
But demand in China, the world's second largest consumer, remains robust, calculations based on official data showed.
China's apparent demand climbed 10.8 percent in April from a year earlier, the highest rise since 2004.
OPEC ASSURANCE
OPEC President Edmund Daukoru told Reuters on Monday the cartel will probably keep output unchanged on Thursday and keep pumping as much as it can to ease concern of a shortage.
Prices are responding to growing tensions between Iran, OPEC's second largest producer, and the U.S. over Iran's nuclear work, he said. They are also jittery over the forthcoming hurricane season in the Gulf of Mexico and new environmental laws on motor fuels in the U.S., he added.
"These are all symptoms of a tight market where small disruptions have a disproportionate response," he said. "It's a crazy countercyclical situation."
Host Venezuela, which has become OPEC's fiercest price hawk under left-wing President Hugo Chavez, said the cartel should cut output because there was already too much oil in stock.
But Energy and Mines Minister Rafael Ramirez conceded that ministers might not back that option due to high prices.
Also on Thursday, foreign ministers of six major powers are to meet in a bid to resolve the crisis over Iran's nuclear work, the Chinese Foreign Ministry said on Tuesday.
Iran said on Monday it had no intention of moving all its uranium enrichment work to Russia to allay fears it could use nuclear fuel technology to make atomic bombs.
OPEC has been pumping more or less flat out for more than a year, though militant attacks in Nigeria have cut back production there by around a quarter and there is no sign that supply will resume any time soon.
Royal Dutch Shell Plc (RDSa.L: Quote, Profile, Research) said on Tuesday it had yet to send teams to its closed oilfields in Nigeria, a necessary step in resuming 455,000 barrels per day of supply shut down in February after attacks by militants.
Both Saudi and Iran recently dropped their oil output.
Do you have a source for that information? I'm not doubting you, I just would like to read more about it.
Thank you, looks like the combined effect of all the OPEC countries was to increase production 100,000 in May over April.
Worse.Much worse.
100 million people vs 1.3 billion
Workers making $25/hour (or more) vs workers making $25/week (if they're lucky)
Workers believing they need thousands per month to survive vs workers knowing that they can survive on $50/month
A government which accepts the concept of private property and personal initiative vs a government that sees everything of value as belonging to it.
Worse...much worse.
And then we have to compare the two countries' political and military ambitions....
That can only hurt their chances.
If China wasn't such a huge potential market, investors would be scared to death of the political and economic climate there.
I'm not buying this anymore.
"Oil rose above $72 a barrel on Tuesday, boosted by a jump in demand in energy-hungry China and continued tension between Iran and the West over Tehran's nuclear programme."
Petroleum speculators have scented blood and will find any reason to contiue driving the price per gallon as high as possible. They won't rest until they suck us dry and the entire western sconomy collapses. If this looks bad - wait until winter and some people will have to chhose between food and freezing.
The Bush administration should be DEMANDING new oil refineries, forcing states with oil reserves off their coastlines to allow drilling there, forcing the ANWAR drilling through, pushing for conversion of electric plants to cola nd nuclear energy and putting more federal money into research in alternate fuel sources.
We could also try hitting all imports from Red China with high tariffs to encourage domestic production and discourage investment in Red China. We are only feeding a dragon which will turn on us as soon as possible anyway.
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