SINGAPORE, AP – Crude-oil futures rose for a second day Thursday after a U.S. report showed domestic crude stocks suffered a larger-than-expected decline as U.S. refineries boosted production rates to meet peak summer fuel demand.
Meanwhile, Kuwaiti Oil Minister Sheik Ahmed Fahd Al Ahmed Al Sabah said the Organization of Petroleum Exporting Countries won’t cut its current output ceiling until oil prices stabilize.
Light, sweet crude for July rose 46 cents to $69.60 a barrel in electronic trading on the New York Mercantile Exchange by afternoon in Europe. July Brent crude futures on London’s ICE Futures exchange rose 33 cents to $67.31 a barrel.
Al Sabah, who also is OPEC’s secretary general, said the situation in Iran and Iraq would play a key role in shaping global oil prices in the coming months.
“I think the (high) prices are still related to the geopolitical (situation), and we hope, through understanding, to solve some problems in the Middle East … and help the stability of the prices,” he said.
The United States and Europe urged Iran on Thursday to lift the veil of secrecy about its nuclear activities and freeze uranium enrichment, with Washington warning that continued defiance could result in tough measures by the U.N. Security Council.
In response, Iran warned the West against undue pressure, saying “the carrot and stick has always been counterproductive.”
Al Sabah also said uncertainties about weather conditions in the United States were a factor, but he expected winter demand for oil to decline, helping to stabilize prices.
For now, he said, prices of crude “will continue at a level between $65-$70 a barrel.”
At Statoil’s Capital Markets Day in Norway, Chief Executive Helge Lund also said he doubts oil prices are heading significantly lower.
“There’s little to suggest that we are heading towards a lower price level,” he said, adding that not only has global oil consumption grown and geopolitical uncertainty increased, but there is also “increasingly fierce competition to find finite reserves,” he added.
The U.S. Department of Energy reported Wednesday that U.S. crude oil inventories decreased by 900,000 barrels last week to 345.7 million barrels.
The report also showed that refiners increased run rates by 1.7 percentage points to 92.7 percent of capacity — the highest level since hurricanes slammed into the Gulf Coast in 2005.
Analysts attributed the drop in crude stocks to the increase in refinery utilization rates, as refineries have to consume more crude oil in the process.
Despite the decline in crude supplies, Purvin & Gertz energy analyst Victor Shum said the data shows that the United States is well-supplied.
“The crude inventory level in the United States is very high — higher above the maximum level over the last five years,” said Shum.
Total gasoline inventories increased by 2.8 million barrels to 213.1 million barrels, higher than the average expected build. On Thursday, gasoline futures rose nearly a cent to $2.0454 a gallon.
Heating oil prices increased about the same amount to $1.9452 a gallon, while natural gas prices dropped 1.7 cent to $6.573 per 1,000 cubic feet.
Shum said the current rebound from the $68 mark isn’t surprising, adding that the price free-fall in recent days was overdone.
“The drop in prices created a buying opportunity for market participants, and this is typical when the price changes substantially over a short period of time,” he said.
Oil prices remain about 23 percent higher than a year ago because the world’s oil producers are pumping almost as much as they can in order to meet daily demand, leaving what is by historical standards a slimmer-than-usual cushion of surplus production capacity.