SINGAPORE – Crude oil futures ended slightly higher Monday, inching closer to $54 a barrel.
Traders initially took profits from last week's gains, sending prices lower, but there was some late buying just one day after the president of OPEC (search) said the market is "well supplied."
Light, sweet crude for April delivery rose 11 cents to settle at $53.89 a barrel on the New York Mercantile Exchange (search).
Brent crude futures rose 25 cents to $52.05 on London's International Petroleum Exchange.
In Nymex trading, heating oil futures (search) were basically unchanged at $1.485 per gallon and gasoline futures declined by less than a cent to $1.5053 per gallon.
Oil prices are roughly 45 percent higher than a year ago, up sharply in recent weeks because of a combination of colder weather, the declining value of the dollar and fears that OPEC could rein in production to head off a seasonal drop in demand.
OPEC President Sheik Ahmed Fahd Al Ahmed Al Sabah said Sunday that OPEC producers are concerned by the recent rise in oil prices, "despite the fact that the market is well-supplied and global crude oil stocks have continued to build, now standing above their five-year average."
OPEC was monitoring the market closely and would review the outlook when the group meets next week in Isfahan, Iran, "to ensure market stability at a reasonable price," he said.
On Monday, the president of Nigeria, an OPEC member, called for the oil-producers' bloc to take action to lower crude oil prices. "Excessive and volatile oil prices are not in the best interests of producers and consumers," President Olusegun Obasanjo said in Abuja, addressing an economic conference held at the headquarters of the Economic Community of West African States.
Some analysts are expecting that the cartel will cut production at its March 16 meeting to boost prices, which have skyrocketed over the past year on supply worries.
But Iran's OPEC minister Hossein Kazempour Ardebili said the group's current output ceiling is expected to remain unchanged. Ardebili told reporters in Tehran that raising production was out of the question, while trimming the ceiling would send the wrong signal to the market.
"My impression is that we will let the present level continue," he said.
"Member states are in consensus about various aspects of the market, including the production level and oil price," he said.
Victor Shum, an oil analyst at Texas-based Purvin & Gertz, said speculative buying by hedge funds has also been driving prices in recent weeks. "In my view, the market is overly excited," he said. "But this suggests that at some point, there'll be a sharp downward correction."
"Prices could fall as fast as they have gone up," Shum warned.
Also Monday, the IPE announced that it will close its Brent and gasoil futures and options trading pits on April 7, switching fully to electronic trading. The IPE had begun electronic trading of its Brent contract in morning sessions in November.