World oil prices escalate

26-May-05

World oil prices have risen after an unexpected pull-back in US crude inventories from six-year high points. A drop of 1.6 million barrels of crude to 332.4 million in the week to May 20 was recorded in the US Department of Energy's (DoE) data, which also showed gasoline stockpiles rising by 600,000 barrels to 215.4 million. Another important factor is the approaching summer- the peak driving season in the US. The data came ahead of the weekend's start to the Memorial Day holiday, when vacationing US drivers guzzle fuel, sending demand for gasoline to an annual peak. New York's main contract, light sweet crude for delivery in July jumped to US$51.40 per barrel - the first breach above US$51 since May 11. Even in London, the price of Brent North Sea crude oil for delivery in July rose to US$50.26 per barrel. US crude levels have been helped by the Organization of Petroleum Exporting Countries (OPEC) producing in excess of 30 million bpd. Although the oil market is likely to face no problems in terms of supply and demand of crude oil in 2005, it may face technical and refining issues in the world, particularly in the US.