Oil prices up despite OPEC move

www.nydailynews.com By TOM VAN RIPER SPECIAL TO THE NEWS

There's not much relief likely at the gas pump anytime soon, despite OPEC's action on Sunday to raise its daily oil production by 6.5%.

Crude oil prices moved up nearly 2% yesterday to $32.26 a barrel, as traders remained skeptical that the new production would make much difference right away. Oil prices have increased 64% during the past year.

Analysts said that retail gas and heating oil prices are likely to continue to rise. In New York, the average price at the pump of regular gas hit $1.67 yesterday, compared to $1.63 a month ago and $1.29 a year ago.

"It generally takes about three to six weeks for output changes to show up at the pump," said AAA spokesman Robert Sinclair, who added that demand for jet fuel and home heating oil could prevent any early rollbacks in gasoline prices.

"You have an increase in air travel after the post-Sept. 11 lows, and a cold winter thus far in the New York region. This means more competition for crude oil," he said.

In an emergency meeting on Sunday, OPEC agreed to raise production by 1.5 million barrels a day in response to the supply loss caused by a strike in Venezuela that has now reached its sixth week.

"The market is suspicious that this move by OPEC will fix the problem," said George Gaspar, oil analyst at Robert Baird & Co. "Venezuela is still the key. They have not only stopped the refining down there, they have stopped drilling. Even if the strike ends tomorrow, there would still be a significant amount of time needed to ramp up again."

Oil traders also bid up prices yesterday after reports that two Norwegian oil fields in the North Sea would close due to technical problems. This could further trim world oil supplies, despite the OPEC production increase. Originally published on January 14, 2003