Oil prices rebound
Sunday, 22 June 2008

AFP, LONDON - Oil prices rose on Friday as top officials prepared for a weekend meeting in the Saudi city of Jeddah to discuss rocketing fuel costs which are contributing to slower economic growth globally.

Prices had fallen sharply Thursday after Saudi Arabia, the world's biggest producer, announced a production hike of 200,000 barrels per day.

News that China would hike domestic oil prices added considerable weight to the downward pressure, on the initial view that Beijing's move would curtail demand in its booming economy.

New York's main oil futures contract, light sweet crude for July delivery, was up 1.17 cents to 133.10 dollars per barrel on Friday in European trading hours, having hit an all-time high of 139.89 dollars on Monday.

London's Brent North Sea crude for August climbed 1.60 dollars to 133.60 dollars, compared with its record peak of 139.32 dollars on Monday.

"The focus for oil prices (Friday) will be the Jeddah Energy Conference this weekend," said analysts at Barclays Capital in a note sent to clients.

"Set against the backdrop of mounting recent international tensions about oil prices and a drift towards internal regulatory intervention in several countries, the Jeddah meeting has perhaps become symbolic of a collection of potential policy watersheds," they said.

Saudi Arabia, the world's biggest oil exporter, is widely expected to formally announce an output increase at the Jeddah meeting.

Ahead of the conference, a statement posted Thursday on the website of the Saudi embassy in London said the kingdom has decided to boost its daily oil output by 200,000 barrels to help cool record-high crude futures. The statement was later withdrawn without comment or elaboration.

Consumers such as the United States claim that major oil producers are not producing enough to help cool mounting prices. Saudi Arabia is believed to be the only OPEC member with significant spare output capacity.

Analysts meanwhile argue that further production increases would still be unable to keep up with demand, notably in energy hungry nations such as China and India.

Major oil producers in turn blame the soaring cost of fuel on speculative trade, political unrest and a weak US currency, which makes dollar-priced goods such as oil cheaper for foreign buyers.

Most members of OPEC, the cartel which produces 40 percent of world oil, claim that supplies are adequate to meet demand.

Venezuela, one of two Latin American countries in the Organization of Petroleum Exporting Countries and a producer which firmly opposes greater output as it seeks to maximise earnings, said overnight that it had decided against sending a delegation to Jeddah.

"Venezuela has decided not to attend," an energy ministry source told AFP late on Thursday.

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