Oil Reaches Record $58 on Concern OPEC Unable to Meet Gasoline Demand

$60 a barrel price possible this week as concerned raised that OPEC, which produces 40 percent of the world's oil, cannot produce enough oil to meet North American summer driving season.

Published: 04-Apr-2005

e oil climbed to a record of more than $58 a barrel on concern that rising output from the Organization of Petroleum Exporting Countries may be inadequate to produce enough gasoline to meet a summer peak in U.S. demand.

On the New York Mercantile Exchange, crude for May delivery rose 78 cents, or 1.4 percent, to $58.05 a barrel at 12:17 p.m. London time, a record in more than two decades of futures trading. Oil has gained 69 percent in the past year.

OPEC, producer of about 40 percent of the world's oil, will this week discuss a second increase in output quotas in 2005, the group's president, Sheikh Ahmad Fahd al-Sabah, said April 2. U.S. refineries may lack the capacity to process additional low- quality oil from OPEC. Gasoline rose to a record for a third day.

``There seems to be a little bit of panic about gasoline despite relatively good stockpile levels,'' said Tony Machacek, a broker at Bache Financial Ltd. in London. ``It's good of OPEC to make a gesture to try to raise production, but they can only increase grades of crude that the market doesn't need.'' It's ``possible'' that prices will reach $60 this week, he said.


Visits to China, India, Malaysia and Pakistan are significant because the trip spells out the Saudi Kingdom's Look East policy, representing a new reorientation in its foreign policy that was heavily tilted toward the West.

The worst two scenarios suggest a drastic decline in output to 875,000 barrels a day by the end of 2007 and to just 520,000 a day by the end of 2008.

Bush said he envisioned a future in which a plug-in hybrid car could drive 40 miles on a lithium-ion battery, then stop at a filling station for ethanol, a fuel usually made from corn, similar to HyMotion Prius pictured below.


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