Oil prices pass $50 barrier
Crude-oil futures has crossed the $50 a barrel mark for the first time in three months amid cold weather and growing supply concerns.
Colder-than-normal temperatures in Europe and frosty weather in the US northeast, the world’s biggest heating-oil market, supported higher product prices on Tuesday.
The front-month contract for light, sweet crude ended at a 2005 closing high of $51.15 a barrel, up 5.8%, on the New York Mercantile Exchange.
Higher-volume contracts for April, May, June and July also finished above $51.
Market participants, growing less jittery about a possible production cut in March by the Organisation of Petroleum Exporting Countries (Opec), have started to worry about longer-term oil supply, said Michael Guido, director of commodity strategy in New York for French bank Societe Generale.
“Spare production capacity has always been an issue, but if these global oil demand forecasts are on the money, can supply keep up?” he asked. “Opec seems to be at [maximum] capacity right now.”
Saudi Arabian Oil Minister Ali Naimi said on Monday that commercial-oil inventories in industrial countries were currently at appropriate levels, with 51 days of forward cover.
He called the amount “a good level”, adding that while greater forward cover of 52 days “would have direct impact on the oil price”, levels were not expected to exceed that amount.