Oil prices rose sharply yesterday after Venezuela said swelling global inventories justified an Opec cut at the group's meeting next week and the US government predicted another busy hurricane season that could threaten rigs and refineries.
The bounce in crude prices came after a steep sell-off across the commodities sector over the past week that had oil at a six-week low earlier in the day.
US crude settled up 70 cents at $69.23 a barrel, recovering some ground after touching its lowest point since April 10 at $67.42. London Brent crude was up 67 cents at $69.35.
Venezuelan oil minister Rafael Ramirez said yesterday that the oil market had enough supply to justify a production cut by the Opec cartel. The group meets in Caracas on June 1st.
"Market fundamentals would indicate a production cut because there is a lot of oil in the market," Mr Ramirez said.
Venezuela has consistently supported a hawkish Opec policy despite soaring energy prices. Other Opec members have said the group was likely to keep output levels unchanged at near-full capacity as crude prices remained close to the record.
Actual Opec production has been reduced in recent months by militant unrest in Nigeria, with attacks taking out one quarter of that nation's exports.
Adding support Monday, the US national oceanic and atmospheric administration said 2006 could bring up to 10 hurricanes, a potential threat to US energy infrastructure still recovering from last year's storms.
Last year's hurricanes temporarily knocked out a quarter of US crude and fuel production, toppling offshore platforms, destroying undersea pipelines, flooding refineries, and sending energy prices over $70 for the first time.
About 20 per cent of the Gulf of Mexico's 1.5 million barrels a day of crude oil production remained shut from the record 2005 storm season, along with 13 per cent of the region's 10 billion cubic feet a day of natural gas production, according to the government. "Each hurricane we get is another roll of the dice on US energy infrastructure," said Peter Beutel, energy analyst at Cameron Hanover.
Oil prices slid nearly 5 per cent last week after signs that the record price of many raw materials was pushing up the cost of living and hitting consumers' pockets.
