Crude oil prices swell above $54 a barrel

03-Jun-05

Overnight in New York floor trade, crude prices have further surged US$2.63 to close at US$54.60 per barrel. Crude futures hovered above the US$54 per barrel mark in Asia today, as strong demand for diesel rekindled traders' worries of scarce distillate supplies in the second half of the year. The emphasis placed on refineries to produce more petrol in the summer driving season, which led to fuels such as diesel and other distillates being neglected. Light, sweet crude for the July contract fell in Singapore to US$54.45 a barrel on the New York Mercantile Exchange. Although oil prices are around 25% higher than a year ago, they will yet need to cross the US$90 a barrel to match the inflation-adjusted high set in 1980. In mid-May, oil prices fell below US$47 a barrel in response to steadily rising crude inventories, but a surprise drop in U.S. oil supplies last week has brought some nervousness back into the market. Crude inventories in the United States, however, still stand at 32.4 million barrels higher than the previous year levels. All eyes are on the Organization of Petroleum Exporting Countries meeting in Vienna on June 15 where the cartel is expected to make a decision on production levels. OPEC at the moment produces around 30 million bpd in an attempt to keep oil prices under control and calm market fears.