Survey: Gas Price Rise Expected
Thursday, May 11th 2000, 12:00 am
By: News On 6
LONDON (AP) â€” Greater crude oil supplies helped ease gasoline prices in April, but a surge in the number of people driving during the summer is expected to push up prices at the pump soon, a respected industry survey said Thursday.
Global oil supplies grew last month by 700,000 barrels a day, or almost 1 percent, with Iraq accounting for much of the increase in exports. As a result, prices for crude fell from their March levels by an average of more than $4 a barrel, the International Energy Agency reported.
Prices for gasoline and other refined products reflected only part of this reduction in the price for crude. Gasoline supplies were pinched because many U.S. and European refineries curtailed output in order to refurbish their equipment, the IEA said.
The report predicted that any additional price relief for motorists would be brief. A rise in demand during the peak summer driving season in North America and Europe threatens to trigger another round of retail price hikes, it said.
The Paris-based IEA is part of the Organization for Economic Cooperation and Development, a group of the world's wealthiest countries.
U.S. gasoline prices remained fairly steady in late April and early May. The average pump price nationwide was $1.5295 per gallon on Friday, according to the Lundberg Survey of 10,000 stations. That was down 25 cents from April 21.
``It's doubtful they're going to get too much cheaper. The season's about to begin,'' said Peter Gignoux, managing director of the petroleum desk at Salomon Smith Barney in London.
One surprise in the IEA report was that imports of oil by seven major consuming countries fell 4 percent in March compared to the previous year.
The IEA said the decrease was exaggerated because demand was unusually strong during the previous March. Nonetheless, Leo Drollas, chief economist at the Center for Global Energy Studies in London, said the decline was staggering.
``It seems the high prices of 1999 are starting to hit the developed countries with a vengeance,'' Drollas said.
Oil prices tripled after OPEC members agreed to curtail production in March 1999, rising above $34 a barrel for West Texas Crude at one point.
The IEA predicted that year-on-year demand would rebound by 2.8 percent in the second quarter, 2.8 percent in the third quarter and 2.9 percent in the fourth quarter.
These increased needs will have to be met mostly with crude exports from the Organization of Petroleum Exporting Countries.
World output of oil increased after OPEC decided on March 28 to boost production back to what it was before last year's cuts. Production jumped to 76.3 million barrels a day in April, an increase of 660,000 barrels, the IEA said. Output rose in every OPEC country except for Iran.
Oil exports from former members of the Soviet Union reached a record high in April, but total non-OPEC production declined, due partly to foul weather and technical problems for Norway's North Sea oil rigs.
Iraq accounted for more than half of the April increase in OPEC supplies, even though it did not participate in the group's latest agreement to boost output.
Gignoux described Iraq as OPEC's ``swing producer'' in today's spot market and said the country has restored its production capacity almost to what it was before the Gulf War.
``Iraq is still the major supply wild card for the near-term oil markets,'' the IEA said.
In trading, June contracts of West Texas Intermediate crude were up $1.18 to $29.28 a barrel on the New York Mercantile Exchange.
June Brent crude from the North Sea closed up $1.09 to $27.51 a barrel on the International Petroleum Exchange in London.