Oil prices forged new one-year highs on Friday as concerns political strife in Venezuela could spin out of control combined with expectations that OPEC will keep its vow to cut output next month.
U.S. gasoline refiners made plans for possible supply disruptions in Venezuela despite assurances from OPEC’s third-biggest producer that this would not happen. The Bush administration said it was “extremely concerned” about surging gas prices.
On Thursday, the head of the U.S. Energy Information Administration said that he expects the average U.S. retail gasoline price to hit a record high this month.
The current national average price for unleaded gasoline is $1.72 per gallon, just 3 cents shy of the record set last autumn, according to the statistical arm of the Energy Department.
U.S. light crude rallied 56 cents to $37.20 in midday trading Friday, extending an 84-cent, or 2.3 percent, surge in New York on Thursday. Prices are at their highest since mid-March last year, just ahead of the U.S. invasion of Iraq.
London Brent crude futures also set a new post-Iraq high of $33.44, before trimming gains to 49 cents at $33.38.
In a surprise announcement on Thursday, Venezuela’s ambassador to the United Nations, Milos Alcalay, said he was resigning in protest over the policies of President Hugo Chavez, lending his weight to demands that the left-wing leader yield to a recall vote.
The U.S. Energy Information Administration (EIA) warned that with gasoline stocks below normal levels, any problems at a refinery or pipeline might trigger supply disruptions and push up prices.
OPEC member Venezuela is a leading supplier of crude and refined products to the United States.
“At present, crude prices are essentially reacting to each new day’s news, with growing fears over possible disruptions to Venezuelan production being the main driver this morning,” said Barclays Capital in a research note.
Venezuela said the Organization of the Petroleum Exporting Countries would stick to its decision to cut production limits in April, despite rising prices.
“We are firm in our decision to keep the one million barrel per day production cut to maintain our prices,” Venezuelan oil minister Rafael Ramirez said on Thursday.
Several producers, including Iran, the UAE and Nigeria, have already informed refiners of lower supplies from April 1.
Leading OPEC producer Saudi Arabia is due to decide export volumes for April in about a week’s time and OPEC ministers meet again on March 31 for a scheduled review of policy.
Oil prices have found support from strong demand in China, the world’s second-biggest oil consumer. Premier Wen Jiabao said at the opening of parliament on Friday China would boost production of coal, electricity and oil products to ease its energy squeeze.
China’s crude oil imports hit a record 91.1 million tons in 2003, some 31.2 percent higher than the previous year. Its crude imports for January this year rose 23 percent from the same month last year to 10.3 million tons, or 2.5 million barrels a day.
