Concerns that output will not meet demand makes crude oil rocket skyward

27-Jun-05

U.S. crude-oil inventories have dropped for three consecutive weeks, raising concern that producers will not keep up with refiner needs as they make gasoline for the summer driving season. Demand for oil-based fuels in the past four weeks has been 1.7% higher last year. The crude oil rally is being considered demand-driven, running up against capacity constraints, although Iran and other Organization of Petroleum Exporting Countries (OPEC) are accounted to pump oil higher than their ceiling limit this month. Crude oil for August delivery has risen to about US$60.45 a barrel on the New York Mercantile Exchange. Speculations that the Organization of Petroleum Exporting Countries, which supplies about 40% of the world's oil, may also ship less oil than it was, may lead to the prices seeing new heights. OPEC will now ship about 24.2 million bpd of oil in the four weeks ending July 9, which is considered a downward revision of 60,000 barrels from the four weeks ended June 11.