Crude oil prices rise above US$55

07-Jun-05

The hurricane season has encouraged traders' fears of a supply crunch caused due to the lack in surplus of the refinery capacity. Light, sweet crude for July was up 21 cents to US$55.24 a barrel in electronic trading on the New York Mercantile Exchange in Europe. Brent crude was also up 8 cents at US$54.25 a barrel on the International Petroleum Exchange in London. Oil prices have escalated as traders' fear that the heating oil supplies will be insufficient because refiners are striving to meet demand for gasoline and diesel. The forecast of a hurricane this season has also put the market on the edge as the damage caused due to Hurricane Ivan still remains fresh in the minds of the traders. Due to Ivan, more than 30 million barrels of oil were lost in the Gulf of Mexico. The recent jump of oil prices has been defying market fundamentals, with barely any new bullish factors emerging during the last two weeks. Infact the US inventory data has also been showing distillates stocks rising by about 2.7 million barrels in the last two weeks. The whole industry is convinced that high prices are here to stay, but traditional price hawks want lower output. It seems that Iran wants to urge fellow members of the Organization of Petroleum Exporting Countries to trim overproduction.