Saudis Also Deny Boosting Production : Short-Term Factors Cause Oil Prices to Rise Sharply

Oil prices rose sharply Thursday and partly erased steep losses from earlier this week, but traders attributed the rebound to short-term influences and Saudi Arabia’s denial that it was boosting production.

On the New York Mercantile Exchange, the near-month contract for West Texas Intermediate crude advanced 32 cents per 42-gallon barrel from its 21-month low to close at $14.76.

Among refined products traded on the exchange, wholesale unleaded gasoline rose 0.06 cent a gallon to 50.54 cents, and No. 2 heating oil rose 0.77 cent a gallon to 40.91 cents.

Douglas R. Peterson, a broker at E. D.& F. Man International Futures Inc. in New York, called it a short-covering rally, meaning that the rise was caused by speculators who had purchased oil to cover borrowed oil they had sold earlier. Short-covering is an internal market influence that causes brief price rises.

Others attributed the advance to official Saudi denials of expanded production by the world’s largest oil exporter.

There have been repeated reports that Saudi Arabia and its key Arab allies in the Organization of Petroleum Exporting Countries are sharply raising output in reaction to widespread quota cheating by other OPEC members. These reports have played a major role in the oil market’s recent decline.

Iran on Thursday accused the Saudis and other Gulf producers of trying to grab market share.

“Developments in the oil market over the past month reveal the political intentions of the OPEC minority wing--Kuwait, Saudi Arabia, the United Arab Emirates, Qatar and Iraq--to push down oil prices,” Tehran radio said.

Other rumors circulating in the market suggested that the Saudis are selling more oil to pay for their multibillion-dollar weapons deal with Britain.

The Saudi Press Agency said the country was the victim of an “artificial information campaign . . . by oil brokers and their agents in the market.”

“The kingdom strongly denies the truth of such charges and wishes to reaffirm its full commitment to its assigned level of production by OPEC,” the statement said.

Meanwhile Norway, not a cartel member, said it would reassess curbs on its modest North Sea output, imposed to help OPEC defend prices, if the rumors prove true. Such action would be largely symbolic.

“I hope the rumors turn out to be false,” Norwegian Oil Minister Arne Oeien said. “But we are watching the situation very closely. . . . And if they are true, then we are in a very difficult situation.”

“OPEC’s credibility has clearly, for the time being, been reduced,” he said. “Current weak prices are due to the rumors and we must establish whether there has been major production above agreed quota levels.”