Oil prices rise amid supply worries

Oil prices rise amid supply worries

Agence France-Presse London

World oil prices extended recent strong gains on Friday amid worries about the possibility of supply shortages later in the year.

New York's main contract, light sweet crude for delivery in July, rose 21 U.S. cent to US$56.79 per barrel in electronic deals.

The contract had jumped $1.01 to end at $56.58 on Thursday as a shortage of refinery capacity in the United States and a fall in US crude stocks prompted strong buying interest.

In London, the price of Brent North Sea crude oil for delivery in August climbed 43 U.S. cents to $56.65 per barrel. It had closed up 98 U.S. cents on Thursday.

Oil prices were closing in on record high points of $58.28 per barrel in New York and $57.65 in London recorded in April.

Prices have shot up since Wednesday after the U.S. Department of Energy (DoE) said crude oil reserves fell 1.8 million barrels to 339 million in the week ending June 10.

The data was released a few hours after OPEC's 11 members agreed to raise the cartel's production ceiling by 500,000 barrels per day (bpd) on July 1 and said it might repeat the move by September.

OPEC's quota increase was largely seen as a symbolic gesture, however, because the cartel was already pumping more oil than its official ceiling of 27.5 million bpd set before Wednesday's increase.

Despite the DoE reporting a rise in weekly U.S. distillates stockpiles, the market remains worried about a possible heating fuel shortage during the fourth quarter.

After its ministerial meeting in Vienna on Wednesday, the Organization of Petroleum Exporting Countries warned consumer nations and the oil industry that they must tackle a refinery bottleneck which it blames for driving oil prices higher.

Oil ministers were adamant that their move to stabilize markets must be accompanied by investment in adequate refineries, which are essential to convert crude oil into products such as petrol or heating fuel.