Price of Crude Rises Again on World Markets
Oil traded on world markets rose by as much as 53 cents a barrel Thursday after Mobil’s chairman said oil prices could recover to the low end of the $20 to $28-a-barrel range if OPEC agreed to curb production.
But United Arab Emirates Oil Minister Mana Said Oteiba said the recent oil price rebound to the $15-a-barrel level was only temporary.
He estimated current OPEC production at “around 18 million barrels” despite the cartel’s recent decision to reduce output to 16.3 million barrels daily by July 1.
Mobil Chairman Allen E. Murray told the company’s annual stockholders meeting in New Orleans that his guess was that oil prices would stabilize “toward the lower end” of the $20 to $28-a-barrel range if OPEC worked out a coordinated production policy.
Higher Winter Demand
“It’s our judgment that financial and political pressures will cause OPEC to reach some kind of agreement” that might happen “in about six months, when crude oil demand increases due to the onset of cold weather in the Northern Hemisphere,” he said.
Murray said higher winter demand would make it easier for OPEC’s 13 member-nations to accept new national output quotas.
Analysts said the oil price rally has been propelled by strong U.S. gasoline demand and expectations that even heavier summer driving will help whittle down the global oil surplus, since U.S. fuel supplies are tight.
But oil prices still are about 50% below the $28-a-barrel average that prevailed last December, when the Organization of Petroleum Exporting Countries abandoned production and price controls in a bid to regain its “fair share” of the market from outside producers.
On the New York Mercantile Exchange, West Texas Intermediate--the benchmark U.S. crude for immediate delivery--climbed 53 cents to $15.74 a barrel Thursday. The crude broke through the critical $15 barrier Wednesday and closed at its highest level in almost three months. Traders said the domestic crude surpassed another major resistance level at $15.50 on Thursday and appeared headed toward the $16-a-barrel mark.
