Oil prices remained strong early on Friday, after gains on Thursday spurred by a depletion of US stocks and the realization that there is no immediate output increase on the horizon.
In London, the price of benchmark Brent crude for July delivery remained above the 29 dollar-mark at 29.11 dollars a barrel, although it weakened slightly, falling eight cents from the opening.
In New York, light sweet crude for July delivery rose 1.13 dollars to close at 30.14 dollars on Thursday.
GNI Research in its daily note that Thursday's rally had "pretty much" reversed the slump of the day before as rumors of an early output increase were discounted.
Prices drew further steam from the release of bullish supply data by the American Petroleum Institute.
On Wednesday, the institute reported that stocks of crude and of petrol (gasoline) had fallen more sharply than expected in the United States last week, just at the onset of the summer holiday period when the use of private cars increases.
An analyst at Merrill Lynch, Chris Buckley, said that prices were "unsustainably high."
The slight weakening in London Friday he said was "neither here not there. Prices are still amazingly strong."
On Thursday, Iran's governor Hussein Kazempur-Ardebili was quoted as saying by Iranian state radio that the current price of crude could lead to an automatic increase in output under the mechanism established by the Organization of Petroleum Exporting Countries (OPEC) at its March meeting.
The meeting decided effectively to restore output levels to those of March 1999 to stabilize prices that earlier this year soared to nine-year highs well over 30 dollars a barrel.
In addition, it reached an informal agreement automatically to adjust supplies by half a million barrels per day if prices fell above or below a range of 22-28 dollars over a 20-day period.
Analysts, however, have repeatedly emphasized that the precise workings of the mechanism remains obscure as OPEC has never published details.
The Iranian official stated his opposition to any output on top of an automatic increase and said: "A rise in production of up to 500,000 barrels per day (bpd) is enough to halt the rise in prices."
The price of the OPEC basket rose Tuesday to 28.46 dollars a barrel, while the 20-day average on Wednesday was 27.31 dollars a barrel. No later figure was available.
In Madrid, Spain's Petroleum Industry Association chairman Luis Javier Navarro on Thursday called for the United States and the European Union to join forces to pressure OPEC to raise output with the aim of stabilizing prices.
Speaking to reporters, Navarro said an increase in production of at least 2.1 million barrels per day would be required to ensure a decline in international oil prices -- LONDON (AFP)
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