NEW YORK (AP):
OIL PRICES surged above US$32 a barrel for the first time since mid-March yesterday, as traders fretted about scant supplies, the rising price of natural gas and a signal from the Organisation of Petroleum Exporting Countries (OPEC) that production cuts might be on the horizon.
The weak dollar is also making it more expensive to buy oil, analysts said.
Crude for July delivery was up 62 cents to US$32.35 on the New York Mercantile Exchange yesterday afternoon, down from an intraday high of US$32.50.
The last time Nymex oil prices closed higher than US$32 a barrel was March 17, a few days before the start of the war in Iraq.
FELL SHARPLY
Prices then fell sharply after United States-led forces quickly secured Iraq's most abundant oil fields and analysts speculated that the country's supply would make up for lost production elsewhere.
As the military conflict wound down, crude futures dropped as low as US$25.24 on April 29. But prices have risen steadily since then as it became clear that Iraq's oil industry was in bad shape and that the country's crude would not flood the global market anytime soon.
"The market is starting to wake up to the fact that while Iraq is going to be a big deal down the road, near-term it isn't going to be much" of a contributor to world supplies, said Phil Flynn, an analyst at Alaron Trading Corp. in Chicago. Iraq, which pumped around 2.1 million barrels a day before the war, is now producing below one million barrels a day.
On the domestic front, the Energy Department reported yesterday that commercial inventories of crude fell last week by 4.6 million barrels to 284.4 million barrels, or 37 per cent below year ago levels.
