SINGAPORE (AFP) — Oil prices were higher in Asian trade Tuesday as concerns over tight supplies overshadowed the impact of a move by oil kingpin Saudi Arabia to boost output, dealers said.
In afternoon trade, New York’s main oil futures contract, light sweet crude for June delivery, was up 29 cents at 127.34 dollars per barrel.
The benchmark futures contract had closed at 127.05 dollars on Monday at the New York Mercantile Exchange, off its all-time peak of 127.82 dollars struck Friday.
London’s Brent crude contract for July rose six cents to 125.12 dollars per barrel. It had hit a record 126.34 dollars Friday.
Amid rocketing prices, Saudi Arabia increased oil output by 300,000 barrels per day to meet demand and compensate for lower output from other producers, Saudi Oil Minister Ali al-Nuaimi said on Friday.
Saudi Arabia, the world’s biggest producer of crude, said that by June it would be producing 9.45 million barrels of oil per day.
But Victor Shum, an analyst with energy consultancy Purvin and Gertz in Singapore, said there were no signs that prices were cooling down following Saudi Arabia’s decision.
Prices are expected to remain high because of tight supplies amid persistently robust global demand, he said.
“The tightness in the market continues to empower investors to ply money into oil… so (prices) are likely to test the psychological level of 130 dollars in the near term,” Shum said.
“There are no signs of any major correction (in prices).”
Saudi Arabia’s al-Nuaimi had earlier reiterated the view of the Organisation of Petroleum Exporting Countries (OPEC) that global oil supply was balanced with demand.
Saudi Arabia is the largest oil producer in the 13-nation OPEC, which pumps about 40 percent of the world’s oil.
Last week, OPEC trimmed its 2008 estimate of world oil demand growth, citing higher prices and slower economic momentum in major industrialised countries, including the United States.
In its latest monthly report published Monday, the independent Centre for Global Energy Studies said that oil prices would continue to rise unless there was a worldwide recession.