Light sweet crude oil finished down 42 cents at 54.15 when markets closed today. Brent crude dropped 28 cents. The drops continue from yesterday after Saudi Crown Prince Abdullah assured President Bush that crude oil production would remain high and continue to climb in the months and years ahead.
Some experts remain skeptical however. In a recent Bloomberg story, traders said their customer’s are questioning what really happened.
“The meeting was met by skepticism by my customers,” said Aaron Kildow, a broker at Prudential Financial Derivatives, LLC in New York. “It looked like the Saudis were blowing smoke but one can’t deny they have raised output recently. It looks like a lot of the increased OPEC output will be headed our way because of refinery maintenance in Japan and elsewhere in Asia.”
The futures of crude would seem to remain up in the air as OPEC claims that reserves remain sufficient but Saudi said they would provide the oil the investors wanted.
“We believe that supplies, as we speak, are adequate,” Prince Abdullah’s foreign policy adviser, Adel al-Jubeir, said yesterday following the meeting in Crawford, Texas. “Saudi Arabia has some spare capacity that it can produce,” he said.
In the U.S. refinery shutdowns have also played a part in the recent high prices of gasoline. Refineries have been plagued with problems during the season when they are expected to ramp up production to build stocks for the summer demand. A number of facilities dropped production for a week because of unscheduled maintenance and the ConocoPhillips facility in Louisiana remains down a second week.
Demand remains high worldwide though as economic indicators in China show growth levels remain high and a new report from the U.N. showed India’s projections look strong for the future.
President Bush said, “One thing is for certain: The price of crude is driving the price of gasoline. The price of crude is up because not only is our economy growing, but economies such as India and China’s economies are growing”
John Stith is a staff writer for Murdok covering technology and business.
