Oil prices rise as OPEC stands pat

June 16, 1994|By New York Times News Service

DALLAS -- Oil prices bounded yesterday to their highest levels in a year as OPEC vowed not to boost crude production this year and a report showed that stockpiles had fallen in the United States.

Crude oil for July delivery rose 91 cents, to $19.86 a barrel on the New York Mercantile Exchange yesterday, continuing an advance from the $14 range in March.

Analysts also pointed to fears of a Korean confrontation with the West over nuclear weapons, and fresh signs that no oil would soon be flowing from Iraq.

By late in the day, all the provocations and fears seemed to feed each other. "A lot of times, the market interprets everything in a certain way," said John Lichtblau, chairman of the Petroleum Industry Research Foundation.

Refined energy products also jumped yesterday in commodities trading, although not as sharply as crude oil. Spot prices of gasoline rose 1.67 cents, to 52.15 cents a gallon; heating oil rose 2.65 cents, to 50.58 cents a gallon.

At the pump, gasoline prices have also been rising steadily, although they tend to be less volatile than crude oil. Regular self-serve unleaded bottomed out at $1.02 in the March 11 Lundberg Survey, reaching $1.09 in the June 10 survey, the most recent.

Trilby Lundberg, whose North Hollywood, Calif., firm conducts these surveys, said that the reviving economy as well as higher crude oil prices were pushing up the cost of gasoline.

"It's not just vacations," she added. "It's commerce, too."

Refineries are running at a high 92 percent of capacity, she said. But gasoline prices may still slip during the summer because producers have already stocked up on the grades necessary to meet pollution requirements.

Relatively low oil prices, brought about by steady and at times excessive production in the second half of last year, was a major reason why inflation in the United States remained in check.

OPEC leaders themselves wondered whether this spring's advance in oil prices could be sustained. But over the longer run, some analysts said, stronger worldwide demand and increased discipline by the Organization of Petroleum Exporting Countries should keep prices from slipping back to the levels of earlier this year.

OPEC members, meeting in Vienna, Austria, agreed yesterday to maintain their production limit of 24.52 million barrels a day through the end of the year. While that action was not a surprise, the oil ministers' decision to forgo a planned September meeting underscored the group's renewed discipline.

Mr. Lichtblau, of the Petroleum Industry Research Foundation, said that the Iraqi oil minister had also stoked the market by denouncing United Nations resolutions concerning the region. Turkey and Iraq have discussed flushing 25 million or more barrels of oil through a pipeline that has been idle since the Persian Gulf war, but U.N. approval would be required.

On the supply side, the American Petroleum Institute reported that the nation's crude oil inventories fell 2.2 million barrels, or seven-tenths of 1 percent, last week.

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