Oil hits 'unwelcome' $US40 By Nigel Wilson and agencies May 10, 2004
PRESSURE is emerging within OPEC to lift daily output after crude oil prices hit the psychological $US40 a barrel mark.
The New York price surged US56c to $US39.93 a barrel on Friday, the highest finish since October 11, 1990, after spiking in earlier trade at $US40.
In London, oil prices raced ahead as traders, anxious about terrorism in the Middle East and low petrol inventories in the US, set their sights on 13-year highs.
British analysts warned that oil could reach $US50 a barrel. "(It's) perfectly possible if we get the wrong sort of headlines from the Middle East," said Kevin Norrish, an analyst at Barclays Capital.
The $US40 price led to predictions of sharply higher petrol prices in Australia, with warnings that unleaded petrol could reach $1.10 a litre within days.
Service Station Association chief executive Ron Bowden said prices were also being pushed up by an oil shortage in the Asia-Pacific region.
"Australian motorists are going to have to get used to high petrol prices over the dollar," he said.
He said prices were unlikely to fall until further investment turned the shortage around, which could take years, or the Middle East settled.
Queensland Premier Peter Beattie urged motorists to shop around.
"We might not be able to influence world oil prices but we can let local outlets know that we are watching them," he said, promising to continue the state's fuel subsidy of 8.3c a litre.
Motorists in Sydney who, like most Australians, do not enjoy subsidised petrol are expected to pay $1.10 a litre.
In Victoria, motoring organisation the RACV reported prices in metropolitan Melbourne as high as 99.9c a litre and warned the worst was yet to come.
Oil prices shot up by more than $US2 a barrel after gunmen attacked a Saudi oil facility at Yanbu port on May1, killing five staff of the Swiss engineering group ABB and a member of the Saudi National Guard.
On Friday, US Treasury Secretary John Snow said he was not happy with the high oil prices.
"The high energy prices we're seeing today are unwelcome and they're unhelpful," he said.
"We've leaned strongly against any actions on the part of OPEC (the Organisation of Petroleum Exporting Countries) to restrict supply, to reduce output, to reduce the quotas."
OPEC members, defying pressure from Washington, agreed in March to cut the daily quota by a million barrels to 23.5 million from April 1.
But OPEC's meeting in June is scheduled to review the daily quota with some members saying it should be lifted to prevent inflation in industrialised countries.
Analysts said the US, the world's biggest energy user, should be able to ride out the shortage because it had a lot more oil than it did this time last year, both in commercial supplies and its strategic reserves.
Strong oil imports, particularly from Mexico and Nigeria, have pushed up US commercial crude oil supplies by 9.1 million barrels, or more than 3 per cent, according to the Energy Information Administration.
Even with last year's lower supplies, oil then was about $US27 a barrel, $US13 cheaper than Friday's price
