LONDON, June 13: World oil prices climbed on Monday on strong buying after traders said too much stock had been sold ahead of Opec’s meeting later in the week. New York’s main contract, light sweet crude for delivery in July rose 51 cents to $54.10 per barrel in early deals after striking as high as $54.60.
In London, the price of Brent North Sea crude oil for delivery in July climbed 47 cents to $53.14 per barrel after hitting $53.72.
“The market had gone home short on Friday,” ABN Amro trader Paul Goodhew said. “Although it looks like there may be an adjustment in supply, people have had to cover their shorts today and that’s the reason why we are up now.”
Prices had dipped early on Monday as Opec kingpin Saudi Arabia maintained that the oil cartel should increase its crude production ceiling.
Ministers from the Organization for Petroleum Exporting Countries were due to meet in Vienna on Wednesday to plot their production strategy for the second half of the year.
Saudi Arabian Oil Minister Ali al-Nouaimi argued last week during a visit to Norway that Opec should increase its production ceiling, or quota, by 500,000 barrels per day.
“If you follow my comments in Norway, that should answer all your questions,” he told reporters in Vienna on Monday.
Ali al-Nouaimi, whose country is the only one that can still significantly increase production, said on Saturday that it was a foregone conclusion that Opec would raise its output by 500,000 bpd.
This would bring the production ceiling to 28 million bpd.
The Opec-10, excluding Iraq, currently has its official ceiling at 27.5 million bpd.
Including Iraqi output, Opec produces in excess of 30 million barrels per day — the highest level for 25 years.
Bache Financial trader Christopher Bellew said he doubted “the Opec meeting will have a big impact on prices” because although Opec would increase its ceiling it probably would not introduce extra oil onto the market.
Opec was likely to increase its production quota simply to legitimize current output levels, analysts said.
Traders meanwhile took note of the fact that tropical storm Arlene, which had threatened oil rigs in the Gulf of Mexico last week, was no longer a concern.
