Oil edges back toward $100 mark

Crude oil traded yesterday near Wednesday's record of $100 a barrel as OPEC officials said the group can't curb prices and the United States refused to release emergency supplies.

The Organization of Petroleum Exporting Countries is unable to counter the rally, Libyan and Qatari officials said yesterday. The US doesn't plan to tap strategic reserves, a spokeswoman for President Bush said.

"The US government's refusal to open the SPR, especially with cold weather approaching, is helping to keep prices near that $100 record," said Robert Laughlin, a senior broker at MG Global Ltd in London. "OPEC, while under pressure after yesterday's high, will ignore it."

Crude oil for February delivery rose as much as 36 cents, or 0.4 percent, to $99.98 a barrel, in electronic trading on the New York Mercantile Exchange. The contract traded at $99.70 at 11:20 am in London. On Wednesday, it jumped $3.64, or 3.8 percent, to a record close of $99.62 a barrel after touching $100 earlier in the session.

OPEC's production is already close to maximum capacity and the organization "can do nothing" to curb prices, Shokri Ghanem, the chairman of Libya's National Oil Corp, said in a telephone interview from Tripoli yesterday.

OPEC, supplier of more than 40 percent of the world's oil, can't lower the price because it's driven by speculative investors rather than fundamentals, Al Arabiya reported, citing Qatari Oil Minister Abdullah al-Attiyah.

Brent crude for February settlement rose as much as 66 cents, or 0.7 percent, to a record intraday price of $98.50 a barrel. The contract traded at $97.92 at 11:20 am on London's ICE Futures Europe exchange. On Wednesday, it gained $3.99, or 4.3 percent, to a record close of $97.84.

US crude oil inventories probably fell for a seventh straight week last week to a three-year low, a Bloomberg News survey indicated.

Stockpiles fell 2.18 million barrels in the week ended December 28 from 293.6 million, according to the median of responses by 12 analysts before a report later yesterday from the Department of Energy's Energy Information Administration.

OPEC kept its production targets unchanged at its last meeting on December 5, rebuffing calls by the US to pump more oil. The group next meets on February 1. Other OPEC officials said the group is ready to boost output to cover any shortages.

"If the dispute in Nigeria leads to a shortage, OPEC will consider it appropriate to meet the shortfall," Iran's OPEC governor Hossein Kazempour Ardebili said yesterday in a telephone interview from Teheran.

Indonesia, the second-smallest OPEC producer, will propose that the group increase supply by at least 500,000 barrels a day to lower prices, said Maizar Rahman, OPEC governor for Indonesia.

Oil's push to $100 a barrel was aided by renewed violence in Nigeria, forecasts for a decline in US inventories, disruption at a European refinery, and a weaker dollar.

The dollar's 11 percent slide last year against the euro helped boost oil prices because it made commodities cheaper for buyers outside the US and attracted investors seeking a hedge against inflation.

Agencies

(China Daily 01/04/2008 page17)