Oil analyst Jamal Qureshi, of energy consultant PFC Energy, in Washington, on Friday said the problem was not crude oil as there was plenty on the market.
Still, the relatively small amount of surplus oil-production capacity is an important factor underlying the jitters on energy markets, keeping traders on edge about the possibility of output disruptions.
Opec failed to soothe the market earlier this week when it agreed to raise its daily output quota to 28 million barrels a day because its members had already been unofficially exceeding that level.
Including Iraq, which is not bound by the cartel’s quota system, the Opec members are pumping close to 30 million barrels a day, or about 35% of global demand.
Opec said it would consider another 500,000-barrel-per-day increase if prices do not fall.
“The problem is not crude right now, there’s plenty of crude on the market”
On Friday, light sweet crude for July delivery rose $1.32 to $57.90 a barrel in midday trade on the New York Mercantile Exchange. That is about 50% higher than a year ago and not far from the intraday peak of $58.28 set in April.
But it is still well below the inflation adjusted high above $90 a barrel set in 1980. On London’s International Petroleum Exchange, Brent crude for August delivery rose 78 cents to $57, a price level not seen since early April.
Petrol futures climbed 3.32 cents to $1.631 per gallon on Nymex, where heating oil futures rose 2.25 cents to $1.648 per gallon.
Oil prices had dropped below $47 a barrel in May as traders locked in profits from the prior run-up and as data pointed to slower economic growth and rising crude oil inventories around the globe.
But the cooling off period did not last long and prices returned to their perch above $50 a barrel before the month was over.
The Energy Department’s weekly petroleum report has helped push prices higher in recent days because it showed that gasoline demand in the United States has averaged nearly 9.5 million barrels a day over the past four weeks.
That is 3% above the same period last year – a pace that, if sustained, could push up petrol prices, which now average $2.13 a gallon in the US.
Light sweet crude rose on the
The Energy Department report said crude oil inventories stood at 329 million barrels, or 9% above last year, while petrol inventories were at 215.7 million barrels, or 5% higher than a year ago.
But PFC’s Qureshi said he expected supplies to tighten as summer wears on. “I think we’re at a turning point,” he said.
Fears of potential refinery glitches during the hurricane season in the United States have also added to market insecurity in recent days.