Growing demand and speculation that major oil producing countries will not soon increase production helped spark a surge in international futures markets, with crude futures climbing above $29/bbl on the New York Mercantile Exchange Thursday. The rebound was stimulated in part by a monthly report by the International Energy Agency (IEA) in Paris that indicated higher levels of production will be needed to satisfy growing demand for oil during the rest of this year.
Other sources said the rise also was fueled by speculators who figure major oil-producing countries will not again increase production. Some claim there is not much spare production capacity outside of Saudi Arabia that can be easily brought on stream. And even the Saudis' ability to boost production may be more limited than some assume.
In NYMEX trading, June crude shot up $1.01 to close at $29.11/bbl Thursday. The July contract rose 89� to $28.94/bbl.
Nymex contracts for June delivery of natural gas increased by 3.5� to $3.35/MMbtu.
Refined petroleum products prices also increased. June contracts for home heating oil closed at 77.31�/gal, up 4.03�, while unleaded gasoline surged 2.44� to 93.64�/gal.
Although the peak winter demand season for heating oil has closed, the market for distillates remains strong. Stocks are at historical lows, causing concern among traders who report demand for diesel fuel is rising steadily.
In London, the International Petroleum Exchange also saw a sharp rise in the June contract for Brent crude to $27.50/bbl, up $1.08/bbl from the previous day.
Meanwhile, the OPEC basket price for seven crudes also increased to $27.35/bbl Thursday, from $26.38/bbl Wednesday.
The rebound carried over into the usually quite Brent pit of the Singapore Exchange, where the June contract rose to $26.82/bbl Friday, up 40� from Thursday's close. The July Brent contract gained 16� to $26.43/bbl.
