Oil prices jump above $65; first time in 2009

29 May 2009,

NEW YORK: Oil prices rose above $65 per barrel on Thursday as OPEC maintained crude production levels as expected and a pair of
suggested an economic rebound may push energy prices higher.

Benchmark crude for July delivery added $1.56 to reach $65.01 a barrel on the New York Mercantile Exchange, a six-month high.

In London, Brent prices gained $1.80 to $64.30 a barrel on the ICE Futures exchange.

Retail gas prices have shadowed oil prices, ticking higher every day this month. Gas prices are not only rising because of crude. Refiners, stung by falling demand for gasoline, have cut back sharply on production this year.

The national average pump price increased 1.5 cents overnight to $2.449 a gallon (65 cents a liter), according to auto club AAA, Wright Express and Oil Price Information Service. Gas is 40.1 cents a gallon more expensive than last month, but it's still $1.495 a gallon (39 cents a liter) cheaper than a year ago.

Despite the uptick in petroleum prices, US energy consumption still hovers at its lowest level in a decade.

The Energy Information Administration said on Thursday that US storage facilities added another 106 billion cubic feet of natural gas last week, putting the overall surplus well above the five-year average.

That's largely because manufacturers and other big industrial power users have been slashing production and cutting jobs.

The lack of spending on energy over the past several months has meant growing supplies and lower prices, compared with last year.

On Thursday, however, the Organization of Petroleum Exporting Countries stood firm on production levels. Oil prices have nearly doubled since the beginning of the year as the group uncharacteristically complied with production quotes for the most part.

Even though a huge glut of oil remains, OPEC President Jose Maria Bothelo de Vasconcelos said Thursday that the organization has seen signs of an economic upturn.

Signs that those cuts may be working have showed up weekly in U.S. government reports on the level of unused oil in storage.