Crude Oil Holds $56 a Barrel
Updated from 2:19 p.m. EST
Crude oil prices closed slightly lower Monday but remained within striking distance of $57 a barrel, amid the possibility that OPEC may decide to increase production again.
The April futures contract settled down 10 cents to $56.62 in Nymex floor trading, having traded above $57 earlier in the session. The contract set new record intraday and closing highs last week.
The
Associated Press
quoted Saudi Arabia's oil minister as saying the cartel is considering another boost in its official output by 500,000 barrels a day, having agreed to an increase of the same size last week at its regular meeting in Iran. That increase is scheduled to take effect April 1.
Bloomberg
reported that the Saudi oil minister said the cartel members are discussing a date for another hike. At its meeting last week, OPEC said it was prepared to implement another increase should circumstances warrant it.
The cartel's decision last week failed to cool the market as prices soared on bullish U.S. inventory data, surpassing the previous record high of $55.17 set last October. Later in the week, prices hit an intraday high of $57.60.
Traders Monday also appeared to be focusing on news of a strike by Nigerian oil workers scheduled for early April. Any disruption in supply at this point would have an immediate impact on prices.
The 2005 rally comes as something of a surprise after a steep correction in late 2004. Prices fell about 25% from their October peak, before resuming their upward march. At this time last year, the benchmark U.S. crude was trading around $35 to $37 a barrel.
The rally in crude oil has pushed the average price of a gallon of gasoline past its record high of last summer.