Crude-Oil Prices Rise After OPEC Raises Forecast for World Demand Growth

Crude oil surged above $48 a barrel in New York, after the Organization of Petroleum Exporting Countries said global oil consumption will increase more than expected this year, led by surging demand in China.

“The market is very jittery and for good reasons,” said Boone Pickens, who oversees more than $1 billion in energy- related investments at his Dallas hedge fund firm. “Worldwide production is 83 million barrels a day and it’s never going any higher than that.’‘
Feb. 16 (Bloomberg) — Crude oil surged above $48 a barrel in New York, after the Organization of Petroleum Exporting Countries said global oil consumption will increase more than expected this year, led by surging demand in China.

Chinese oil use will climb by 500,000 barrels a day, to 7 million a day, because of faster-than-expected economic growth of 8 percent, according to an OPEC report. Price fell earlier on an Energy Department report showing that U.S. crude oil and gasoline stockpiles declined by more than expected last week.

“The market is very jittery and for good reasons,” said Boone Pickens, who oversees more than $1 billion in energy- related investments at his Dallas hedge fund firm. “Worldwide production is 83 million barrels a day and it’s never going any higher than that.”

Crude oil for March delivery rose 84 cents, or 1.8 percent, to $48.10 a barrel at 1:35 p.m. on the New York Mercantile Exchange. Prices rose to $48.30 a barrel, the highest since Jan. 28, after reports of a blast in Iran. Futures are up 37 percent from a year ago.

In London, the April Brent crude-oil futures contract rose 61 cents, or 1.3 percent, to $46 a barrel on the International Petroleum Exchange. Brent futures touched $46.55, the highest since Jan. 27.

“China is now number two in imports, up from three, after passing Japan,” Pickens said. “You will see more and more distance between them” as China’s growth outpaces Japan, he said. “If they build the highways that are planned, that in itself would be a billion barrels of oil.”

World oil demand will rise to 83.78 million barrels a day, OPEC said today in a monthly e-mailed report.

U.S. Inventories

Supplies of crude oil rose 2.1 million barrels to 296.4 million in the week ended Feb. 11, according to the weekly Energy Department report. An increase of 1 million barrels was expected, according to the median of forecasts among 16 analysts surveyed by Bloomberg. Stockpiles rose to the highest in more than seven months, according to figures from the department. Inventories are 10 percent higher than a year ago.

Gasoline stockpiles surged 4.9 million barrels to 221.7 million barrels, the highest since February 1999. It was the third straight week of gains and the largest weekly jump in more than a year. A rise of 350,000 barrels was expected.

To contact the reporter on this story:
Mark Shenk in New York at mshenk1@bloomberg.net.

To contact the editor responsible for this story:
Robert Dieterich at rdieterich@bloomberg.net.

Last Updated: February 16, 2005 13:48 EST