World oil prices jump $4 as US crude reserves tumble

ABS-CBN News

Posted at Jun 12 2008 01:10 AM | Updated as of Jun 12 2008 09:10 AM

Agence France-Presse

LONDON - Oil prices jumped more than 4.0 dollars to above 136 dollars a barrel on Wednesday after news that American crude reserves sank for the fourth week in a row.

New York's main oil futures contract, light sweet crude for July delivery, jumped 4.44 dollars to 135.75 dollars per barrel, after earlier reaching 136.80.

The contract had surged to a lifetime high of 139.12 dollars last Friday, when it won a record-breaking 10.75 dollars in one day's trade.

Elsewhere on Wednesday, Brent North Sea crude for July delivery rallied 3.84 dollars to 133.64 dollars, after hitting a historic peak of 138.12 last Friday.

The US government's Energy Information Administration (EIA) announced Wednesday that American crude stockpiles dived 4.6 million barrels in the week ending June 6.

That was far heavier than market expectations for a drop of 1.5 million barrels and marked the fourth straight weekly fall.

Prices rallied Wednesday as more details emerged about a meeting on June 22 of the world's biggest oil producers and consumers to discuss record-high crude prices.

OPEC Secretary General Abdullah al-Badri said that the meeting, to take place in Jeddah in Saudi Arabia, will be at head-of-state level.

"The meeting in Jeddah will be the head of states and they will discuss why we have high energy prices," Badri told AFP on the sidelines of an energy conference in London on Wednesday.

Badri would not be drawn on which heads of state would attend the one-day gathering that was announced by Saudi Arabia on Tuesday.

US President George W. Bush will not attend, a White House spokesman said. Energy Secretary Samuel Bodman will travel to the meeting instead.

Saudi Arabia's cabinet on Monday asked Oil Minister Ali al-Nuaimi to convene a meeting of producer and consumer nations, and oil firms, "to discuss the jump in prices, its causes and how to deal with it objectively."

European countries, the European Commission, the International Energy Agency (IEA) -- the energy watchdog for industrialized countries -- and the heads of investment banks Morgan Stanley and Goldman Sachs would be invited, he added.

Analysts in the Gulf said the call for the meeting was aimed at showing that OPEC states were not responsible for the price surge.

OPEC, whose members collectively produce about 40 percent of the world's crude, maintains that the oil market is well supplied and current prices do not reflect the fundamentals of supply and demand.

Saudi Arabia, a close Western ally, has come under huge US pressure to boost output.

Ahead of the Jeddah meeting, finance ministers from the Group of Eight (G8) rich nations will gather in Japan this weekend to discuss ways to limit the economic damage of soaring oil prices, which have eclipsed the credit crisis as their biggest worry.

The Paris-based IEA said Tuesday it expected global oil demand to average 86.8 million barrels per day this year, 80,000 fewer barrels than its estimate last month.

It said the downward revision took account of the reduction of price subsidies in several countries.

The IEA said the supply situation remained tight, while in the industrialized nations of the Organization for Economic Cooperation and Development, oil demand is falling.

Oil prices have surged since breaking through the 100-dollar level at the start of the year, and analysts see prices hitting 150 dollars soon.