NEW YORK -- Oil prices set yet another intraday trading record Tuesday, surging close to $114 a barrel as the U.S. dollar fell and crude oil shipments along one U.S. pipeline were said to be moving below capacity, reported the Associated Press. Meanwhile, OPEC said that it is pumping enough oil to meet demand, and the U.S. economic slowdown could lead to weaker-than-expected consumption in the second quarter.
Light, sweet crude for May delivery on the New York Mercantile Exchange traded as high as $113.66 a barrel by afternoon in Europe. That was $1.45 above the trading record set last [image-nocss] week and $1.90 above Monday's record settlement close of $111.76 a barrel.
The recent run above $100 a barrel has been largely attributed to a steadily depreciating U.S. currency because a weakening dollar prompts investors to seek a safe haven in hard commodities such as oil and gold.
Crude was also supported by news of disruptions to crude supplies, though analysts said the interruptions were minor. "They only look like temporary shut downs but...the combination of that and the fact that the dollar was off again was the key," said Mark Pervan, senior commodity strategist at the ANZ Bank in Melbourne, Australia.
The Capline pipeline—the Royal Dutch Shell PLC conduit that carries 1.2 million barrels of crude each day from the U.S. Gulf Coast to the Midwest—was closed on the weekend, and has since resumed operations at a slightly reduced capacity. In Nigeria, Italian energy giant ENI reported a 5,000 barrel per day reduction in production at one of its facilities.
Meanwhile, the Organization of Petroleum Exporting Countries (OPEC) is pumping enough oil to meet demand, and the U.S. economic slowdown could lead to weaker-than-expected consumption in the second quarter, the group said on Tuesday, according to a Reuters report.
The comments, in OPEC's latest Monthly Oil Market Report, underscore the group's reluctance to pump more oil to lower record prices near $113 a barrel, which it said are being lifted by factors beyond supply and demand. "The fundamental picture in the second quarter of 2008 appears to be in line with the typical seasonal pattern for this time of year," the report by economists at OPEC's Vienna headquarters said. "Current OPEC production at more than 32 million barrels per day will be sufficient to both meet demand growth and contribute to further stockbuilds."
OPEC said it expects world oil demand to decline by 1.4 million bpd to 85.7 million bpd in the second quarter, when oil use typically slows as consumers in the northern hemisphere burn less heating fuel. But the weakening economy in the United States, the world's largest oil consumer, means the decline could be steeper. "With growing concerns about the slowing U.S. economy and higher gasoline prices, there is a chance that the decline could be more pronounced, leading to even lower demand in the second quarter," OPEC said.
The 13 members of OPEC pump about two in every five barrels of oil, said Reuters.
OPEC left its estimate for growth in world oil demand this year unchanged at 1.2 million bpd.
Strong consumption in places such as China and the Middle East is expected to offset weak demand in members of the Organization for Economic Co-operation & Development (OECD). OPEC trimmed its estimate for supply from non-member countries in 2008, leading to a small increase in the amount of oil its 13 members need to pump to balance the market.
It expects non-OPEC supply to average 50.28 million bpd this year, about 90,000 bpd less than previously forecast in part due to lower output estimates from the United States and Mexico.
Demand for OPEC oil is seen averaging 31.75 million bpd in 2008, lower than the group's current output and 70,000 bpd higher than last month's estimate.
At its last three meetings, held in December, February and March, OPEC rebuffed calls from consumers, including the United States, to raise supply, saying the world had enough crude. The group has not scheduled another meeting until September, and officials have said there is no need to gather before then.
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