Oil producer and consumer countries met in Brussels to find a solution to the increasing price of oil, which is stable at 137 dollars a barrel. OPEC says it will not boost oil output. (Report: H. Papper)
Oil prices edged higher Tuesday after OPEC's president rebuffed calls for the cartel to boost output and the dollar weakened on expectations the Federal Reserve will leave interest rates unchanged.
New York's main oil futures contract, light sweet crude for August delivery, rose 26 cents to close at 137 dollars per barrel.
In London, Brent North Sea crude for August climbed 55 cents to settle at 136.46 dollars.
"OPEC has already done what OPEC can do and prices will not come down," the cartel's president Chakib Khelil said Tuesday as he arrived for a meeting with European Union energy officials in Brussels.
Saudi Arabia, the largest crude oil exporter in the Organization of the Petroleum Exporting Countries, said at a weekend summit of oil consumers and producers that it was hiking daily output by more than 200,000 barrels to 9.7 million.
OPEC, which pumps about 40 percent of the world's crude oil, has insisted there is enough oil to meet demand.
Khelil blamed high prices on the US "subprime crisis and the ensuing impact of the dollar devaluation and the influx of funds that were loooking for good returns that they could not find in other investments."
He estimated that hedge fund zeal for positions in the oil market added 40 dollars to crude prices.
With oil supply currently greater than demand, Khelil said that the course oil prices take in the coming months depended on the dollar's exchange rate and geopolitical tensions.
Mike Fitzpatrick, an analyst at MF Global, said that sky-high oil prices were finding support "on lingering disappointment" over the Saudi oil summit in Jeddah on Sunday, market expectations the Fed will hold rates Wednesday and new turmoil in Nigeria.
"The simple arithmetic is that demand is outstripping supply, no matter what OPEC does, or how the West chooses to defend itself. There remains a buyer for every additional barrel," Fitzpatrick said.
Sucden analyst Andrey Kryuchenkov stressed that "overall, the market remains well supported, despite Saudi Arabia's promise to pump more oil."
Kryuchenkov said that investors were likely to shift their attention to the foreign exchange market ahead of the Fed announcement on interest rates Wednesday.
"The US central bank is expected to leave rates unchanged at two percent which could put some pressure on the dollar and support crude prices," he said.
On June 16, oil hit record highs of 139.89 dollars in New York and 139.32 dollars in London.
Analysts said oil prices have been underpinned by the weak dollar, which boosts demand for dollar-denominated oil for buyers using stronger currencies, and rebel attacks against oil installations in Nigeria that have dented its oil output.
Date created : 2008-06-25