Home / World Business
Fri, Feb 18, 2005 - Page 12 News List

OPEC's higher forecast boosts crude oil prices

GLOBAL DEMAND Prices moved up for a second day after OPEC said it expected global consumption to rise this year, with daily usage climbing fastest in China

BLOOMBERG

Crude oil rose for a second day yesterday after the Organization of Petroleum Exporting Countries raised its forecast for global oil consumption, citing surging demand in China.

Global demand will rise to 83.8 million barrels a day this year, according to an OPEC report, 5 percent more than the group estimated last month. Daily oil use in China, the world's most populous nation, will climb by 500,000 barrels to 7 million, OPEC said, citing a projected economic growth rate of 8 percent.

"Demand will be up," said Fred Lackman, an independent oil trader in Toronto, Canada. "I think we may touch US$50 by Friday." Crude oil for March delivery rose as much as US$0.25, or 0.5 percent, to US$48.58 a barrel in after-hours electronic trading on the New York Mercantile Exchange. Oil traded at US$48.46 a barrel at 12:26pm Singapore time.

On Wednesday, the contract rose US$1.07, or 2.3 percent, to US$48.33 a barrel on the New York Mercantile Exchange, the highest close since Jan. 27. Prices last rose above US$48 during trading on Feb 1. Futures are up 40 percent from a year ago.

"China is now No. 2 in imports, up from No. 3, after passing Japan," Boone Pickens, who oversees more than US$1 billion in energy-related investments at his Dallas hedge fund firm, said in an interview in New York yesterday. If the Chinese build the highways that are planned, "that in itself would be a billion barrels of oil," he said.

China's government said last month it plans to build 85,000km of expressways in the next 30 years, more than tripling the size of the road network to sustain economic growth and promote development of rural regions.

"Demand is still rising," especially in China, said Chuck Hackett, a broker and analyst at Access Futures & Options Trading, in Woodlake, California. "It's going to keep using more oil" as long as the population keeps growing, he said.

Global demand is set to rise this year by 1.73 million barrels to 83.78 million barrels a day, OPEC said in its February statement. China's fourth-quarter demand was 290,000 barrels a day more than previous estimates, it said.

Prices surged more than US$1 a barrel after reports of an explosion at a nuclear facility in Iran, OPEC's second biggest oil producer. Oil pared gains after the Associated Press, citing Iranian state television, reported that a fuel tank may have dropped from an Iranian plane.

The March contract traded as high as US$48.65 on Wednesday, having earlier plunged below US$47 after a report showed bigger-than-expected increases in US oil and gasoline stockpiles last week.

US supplies of crude oil rose 2.1 million barrels to 296.4 million in the week ended Feb. 11, according to the Energy Department's weekly report.

An increase of 1 million barrels was expected, based on the median forecast from a Bloomberg survey of 16 analysts. Stockpiles are at their highest in more than seven months, and 10 percent higher than a year earlier.

The 2.1-million-barrel rise in crude oil inventories was twice as great as expected because of increased imports to the US, led by Saudi Arabia, said Societe Generale SA analysts Deborah White and Alex Kervinio in a report on Wednesday.

This story has been viewed 4678 times.

Comments will be moderated. Remarks containing abusive and obscene language, personal attacks of any kind or promotion will be removed and the user banned.

TOP top