Oil prices surge to record
NEW YORK – Oil prices surged Wednesday, rising a remarkable $5 a barrel to a record of more than $104 after the government reported a surprise drop in crude oil stockpiles and OPEC rebuffed calls to boost output.
The 13-nation Organization of Petroleum Exporting Countries accused the U.S. of economic “mismanagement” that it said is pushing oil prices to new record highs. OPEC said it would maintain current production levels because crude supplies are plentiful and demand is expected to weaken in the second quarter.
“If the prices are high, definitely they are not due to a lack of crude. They are due to what’s happening in the U.S.,” said OPEC President Chakib Khelil. “There is sufficient supply. There’s plenty of oil there.”
Khelil’s comments came one day after President Bush lashed out at the organization, warning Tuesday: “I think it’s a mistake to have your biggest customers’ economies slowing down as a result of higher energy prices.”
White House spokesman Dana Perino said Wednesday that Bush was “disappointed” OPEC didn’t do more to rein in prices, which some say are pushing the U.S. economy into recession.
Analyst John Hall, of John Hall Associates in London, said OPEC probably should have added oil to the market as Bush had asked.
“But in this time of intense geopolitical tension, it would be difficult for Saudi (Arabia) or any other producer to acquiesce simply because President Bush had asked them to,” he said. “In the short term, any true respite for the consumer is still out of reach.”
The rally in oil prices Wednesday was also caused by border tensions between Colombia and Venezuela, a major oil exporter, and by the unexpected drop in U.S. oil stockpiles.
Most analysts had expected the Energy Department’s Energy Information Administration to report oil supplies rose last week for the eighth straight time.
Instead, they fell by 3.1 million barrels.
The EIA report and OPEC announcement fed a new frenzy of investing in oil futures, which have risen to new inflation-adjusted records this week as the falling dollar drew new investors to the market.
Light, sweet crude for April delivery jumped $5 to settle at a record $104.52 a barrel on the New York Mercantile Exchange. Shortly after the Nymex closed, oil briefly rose to $104.95, a new trading record. Earlier this week, oil prices broke the previous inflation-adjusted price record of $103.76, set in 1980 during the Iran hostage crisis.
At the pump, meanwhile, gas prices rose a cent to a national average of $3.178 a gallon, according to AAA and the Oil Price Information Service.
Gas prices have been following oil’s recent rally and are 69 cents higher than a year ago.
Many analysts expect prices to rise to near $4 a gallon this spring and summer as driving demand picks up.