Oil hits six-month high as OPEC refuses to hike output

29 May 2009

Oil surged past $65 a barrel in the global markets yesterday to a fresh six-month high after OPEC decided to keep output unchanged. A steep drop in US crude inventories and a weak dollar also contributed to the rise.

US crude oil for July delivery on Thursday settled up $1.63 to $65.08 a barrel, the highest settlement since 5 November 5, after hitting an intraday high of $65.44. London Brent crude rose $1.89 to settle at $64.39 a barrel.

US crude stocks fell by 5.4 million barrels to 363.1 million in the week to 22 May, the US energy administration said, as refiners ramped up output ahead of the summer.

OPEC ministers meeting in Vienna opted to leave target output levels unchanged as they believe a strengthening global economy and signs of rising demand would support prices.

Some members of the 12-member oil cartel voiced concern that high global inventories could weigh on prices, but Saudi Arabian oil minister Ali al-Naimi said demand was rising and would drain away excess supplies.

"The price is good. The market is in good shape. Recovery is under way. What else could we want?" he said.