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Oil Rises Above $131 After Slide From Record High

Oil Rises Above $131 After Slide From Record High

Published: May 23, 2008

Filed at 2:46 a.m. ET


SINGAPORE (Reuters) – Oil rose on Friday, recovering from a strong bout of profit-taking in the previous session that pulled prices back more than 3 percent from the record high above $135 a barrel.

U.S. light crude for July delivery <CLc1> was up 65 cents at $131.46 a barrel by 0640 GMT. It surged to $135.09 on Thursday before slumping to settle at $130.81, the first time in five sessions that it settled lower.

London Brent crude <LCOc1> was up 92 cents at $131.43.

“Supplies not growing is still the main thing. OPEC can turn the tap but they cannot do it forever, and non-OPEC growth is not enough,” said Tony Nunan, risk management executive at Tokyo-based Mitsubishi Corp.

“But demand is important too, and it is not falling as much as expected,” he added.

Oil production from countries outside OPEC is stagnating and forecast to remain below 50 million barrels per day this year, at 49.56 million bpd, lower than earlier forecast, a Reuters survey of 12 analysts showed on Thursday.

The failure of non-OPEC producers to increase output has helped drive oil prices up more than a third since the beginning of the year.

It has also sent long-term prices even higher, at close to $150 a barrel, as concerns mount that supplies will not be enough to meet demand from developing countries in a few years’ time.

Weekly U.S. inventories data released this week also hiked short-term concerns, with crude oil stocks unexpectedly down by a large 5.4 million barrels, gasoline inventories also down by 800,000 barrels, and a lower-than-forecast 700,000-barrel rise in distillates stocks.

OPEC Secretary-General Abdullah al-Badri on Thursday repeated the group’s stance that it can do nothing to lower oil prices in a “crazy” market, blaming record prices on factors such as geopolitical tensions, speculation and the weak dollar.

The cartel’s view seemed shared by the chief executive of Royal Dutch Shell Plc <RDSa.L>, Jeroen van der Veer, who told Reuters Television that oil prices are rising due to market sentiment rather than a shortage of supply.

A stronger dollar on Thursday also contributed to lower oil prices as investors have increasingly been using oil as a hedge against the falling currency, setting off inverse trends in the dollar and oil.

The greenback steadied on Friday, but the currency stayed in sight of a one-month low against the euro on worries that inflation could lead to a deeper U.S. slowdown.

(Reporting by Maryelle Demongeot; Editing by Clarence Fernandez) and its also non-profit sister websites,,,,, and are all owned by John Donovan. There is also a Wikipedia article.

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