Oil prices rise above US$52

WASHINGTON: Crude futures briefly rose above US$52 a barrel yesterday as traders bet that prices would go higher — given the world’s strong demand and thin supply cushion — and downplayed a US government report that showed domestic supplies of oil and gasoline rising. “They believe the market is going to US$60 and the only thing that’s going to stand in the way from time to time is the fundamentals,” said Ed Silliere, vice-president of risk management at Energy Merchant Corp.

Silliere said that the Energy Department report was roughly in line with traders’ expectations and therefore wasn’t tempering the market’s recent move higher. Oil prices are up about US$10 a barrel since the beginning of the year, when the Organisation of Petroleum Exporting Countries officially cut back its daily output by one million barrels. Recent signals from OPEC officials that the cartel was unlikely to cut production at its next meeting — as some had originally been suggesting — have failed to calm the market.

Light sweet crude for April delivery rose 22 cents to US$51.90 a barrel in midday trading on the New York Mercantile Exchange. Prices retreated from an earlier intra day high of US$52.50. In other Nymex trading, April gasoline futures rose 3.43 cents to US$1.437 per gallon, while heating oil futures were steady at US$1.467 per gallon. Oil prices are roughly 43 percent higher than a year ago, rising sharply in recent weeks due to a combination of colder weather, the declining value of the dollar and the world’s tight supply-demand balance. Instability in Iraq and underlying fears about terrorism have also played a part in the rally.