Crude oil hits high as OPEC pledge falls flat

Mark Shenk, Bloomberg

A report that US gasoline inventories fell more than expected last week pushed prices past last October’s record of $55.67 a barrel. OPEC meeting in Isfahan, Iran, agreed to boost their quotas by 500,000 barrels a day, or 1.9%.

“US crude supplies rose last week but with the growth of China there’s going to be more competition for barrels in the months ahead,” said Phil Flynn, risk management vice-president of Alaron Trading in Chicago.

Crude oil for April delivery rose 90 cents, or 1.6%, to $55.95 a barrel at 12.13pm on the New York Mercantile Exchange. Futures touched $56.35, the highest since the contract was introduced in 1983. Prices are 49% higher than a year ago.

In London, Brent futures touched $54.95 a barrel, the highest since the contract’s introduction in 1988.

US crude-oil supplies gained 2.6 million barrels to 305.2 million last week, the highest since June, according to the Energy Department. Analysts forecast a 2 million barrel increase.

Gasoline supplies dropped 2.9 million barrels to 221.4 million, the report showed.

It was the biggest one-week decline in supplies since September.

“I am concerned about the price of energy and what it means to the average American family when they see the price of gasoline going up,” said US President George W Bush.

Bush urged Congress to pass energy legislation and allowing oil drilling in Alaska’s Arctic National Wildlife Refuge.