US oil futures fell a dollar from record highs on Tuesday as dealers took profits amid signals producer group Opec could decide in June to raise its output quotas to soothe the rattled market.
Analysts said, however, that surging global fuel demand and oil's popularity with speculative hedge funds had sown doubts in the cartel's power to bring US prices much below $40 a barrel any time soon.
US light crude futures settled down $1.01 to $40.54 a barrel after peaking at $41.85 a barrel on Monday, the highest price since the New York Mercantile Exchange launched the contract in 1983.
London Brent crude slipped 96 cents to $36.95.
Key Gulf oil producer the United Arab Emirates said on Tuesday it stands ready to boost crude output, if needed, in support of any Opec output increase to be decided at the group's meeting June 3.
Leading Opec producer Saudi Arabia has proposed a minimum 1.5 million barrels per day (bpd) rise in Opec's output ceiling in a bid to cool oil prices.
"We, like any producer, are interested if there is any opportunity to increase production and gain an appropriate price," Oil Minister Obaid al-Nasseri said. "We have no objection to seizing this opportunity."
The UAE is one of the few Opec members with spare production capacity. The cartel, which controls half of world oil exports, is already pumping over two million bpd above its official quota limits, raising questions over whether an output hike would mean any additional real barrels.
High oil prices in the United States have triggered a political blame game in advance of the elections this fall, with Democratic presidential hopeful John Kerry claiming incumbent George W. Bush has not done enough to address soaring energy costs.
The White House has said, however, it remains in contact with major oil producers to discuss ways to cool the market. It rebuffed pressure from Democrats Tuesday to open the nation's emergency oil stockpile.
US Energy Secretary Spencer Abraham said on Tuesday he would meet with Saudi Oil Minister Ali al-Naimi later this week on the sidelines of an Amsterdam conference to discuss how to bring prices down from their perch.
Opec member Venezuela said it opposed pressure from the United States for Opec to boost output. Venezuelan President Hugo Chavez told Reuters in an interview that increasing output would be "like giving a sick person the wrong medicine."
Spurred in part by fears of attacks on oil terminals in the turbulent Middle East, speculative hedge funds have also bought heavily into oil markets, helping US crude surge 27 percent so far this year.
"Commodities such as copper and gold are off their peaks now that demand growth has run its course but oil has a special story of insecurity attached to it and that is going to keep driving it forward," said independent London energy consultant Geoff Pyne.
The rush into oil has been hastened by low US interest rates, anaemic equity indices and a weak dollar that make bond, equity and currency markets less attractive to investors.
Despite rising concern over high energy costs, Acting Managing Director of the International Monetary Fund (IMF) Anne Krueger told Reuters on Tuesday that oil prices were not yet in the danger area for the world economy.
Comments
Comments are closed.