Crude oil prices continue to hold 17-month highs and
exceed OPEC's comfort zone, raising expectations that the group soon may push
more oil into the market.
Shokri Ghanem
,
Libya
's top oil official, told Zaywa Dow Jones said he expects crude to hit
$90 a barrel--at least temporarily--as early as next week, as economic recovery
increases demand and trims inventories.
Still, Ghanem, a veteran official of the Organization of Petroleum Exporting
Countries, doesn't see the group convening emergency talks to consider an
official increase in oil production to cap prices. OPEC officials, while
agreeing to keep output restraints in place, said in mid-March that crude
prices hovering in a $70-$80 range were "perfect" and pledged not to
review production policy until October.
The recent price run to a 17-month high above $87 a barrel may be fleeting. "There
is no guarantee that this trend will continue for more than a week or
two," Ghanem said.
While
Libya
joins
Qatar
in eschewing the need for formal OPEC action, oil prices above $85 a barrel this
week may bring nearer the day that
Saudi Arabia
increases its world-leading level of oil exports to cool down prices outside of
a formal restructuring of the group's output policy.
The Saudis have long said they won't deny refiners oil, and latest
U.S.
data show a surprising jump in crude-oil use. In the week ended April 2,
refiners increased crude processing rates to a six-month high of 14.6 million
barrels a day, according to the Energy Information Administration. In its
short-term energy outlook released Tuesday, the EIA said it expects April crude
runs to average less than 14.3 million barrels a day, a 15-year low for the
month.
But the higher crude processing rate was surpassed by a 500,000-barrels-a-day
rise in imports, to 9.56 million barrels a day, the most since mid-September. That
led to a two-million-barrel rise in crude oil inventories, to 356.2 million
barrels, the highest level since mid-June, and kept stocks well above the
five-year average for this time of year.
U.S.
crude stocks have gained 9%, or 29.5 million barrels, in the past 10
weeks, a faster-than-normal rate. But that hasn't stopped crude prices from
rising by more than 15%, or $11 a barrel, in that time. Front-month
May-delivery crude on the New York Mercantile Exchange settled 1.1%, or 96
cents, lower on Wednesday, at $85.88 a barrel, in the first drop after rising
by $6.84 a barrel in the prior six days.
"Interestingly, the [EIA] stats could have triggered more profit-taking,
but didn't," said Michael Wittner, global head of oil research at Societe
Generale in
London
.
Gasoline stocks fell by 2.5 million barrels, the lowest level since Jan. 1, but
remain near 17-year highs for this time of year, while four-week demand topped
nine million barrels a day for the first time since Dec. 25. Apparent demand
strength in the latest week may be tied to movement of winter-grade gasoline
out of storage and movements of fuel through the supply chain ahead of the
Easter holiday, analysts said. The EIA sees only a modest increase in demand
for the most widely used oil product in the world's biggest energy consumer,
with gasoline use in the spring-summer driving season up just 45,000 barrels a
day from a year ago, to less than 9.2 million barrels a day.