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.