Updated from 1:38 p.m. EST
Crude oil prices rose 2% to cross the $32-per-barrel threshold Thursday, but they later retreated, as speculation intensified about whether the
Organization of Petroleum Exporting Countries
would increase production levels at a meeting this month.
Despite news that a meeting in London between OPEC members Saudi Arabia and Venezuela and major exporter Mexico yielded some support of an increase in crude oil production, the meeting participants gave no firm commitments.
April crude oil futures traded on the New York Mercantile Exchange, a barometer of near-term price trends, rose as high as $32.15 a barrel before falling back to settle at $31.69, down 8 cents for the day, as traders took profits.
Oil prices have more than doubled over the past year to the highest levels since the 1991 Persian Gulf war because of a March 1999 agreement between OPEC and non-OPEC producers that curtailed petroleum output. The U.S. and other major oil consuming countries have increasingly complained that petroleum inflation and fuel shortages threaten global economic growth.
The Saudi, Venezuelan and Mexico ministers in London indicated that they agreed in principle to a production increase to ease surging prices, but the lack of detail in their position was taken as a sign that oil producers have not reached a consensus on how much to raise output.
"There is no clear picture on whether an increase in production will come from OPEC or not," said Steven Peters, a vice president in the commodity and derivatives group at
BMO Nesbitt Burns
. "Iraq wants something different from Saudi Arabia who wants something different from Iran who wants something different from Kuwait."
Peters said he expected considerable volatility in oil before the OPEC meeting in Vienna March 27. He added that prices are unlikely to reach what he called the next psychologically important level of $42-$44 per barrel, which last happened in the summer of 1990 when Iraq invaded Kuwait.