World oil prices soared
in volatile trading las Monday on short-term supply uncertainties and a question mark over whether OPEC producers would soon open their taps. International benchmark Brent crude futures traded on London's International Petroleum Exchange (IPE) stood 85 cents a barrel up, while U.S. light crude was up $1.20. Prices are at their highest since the Organization of the Petroleum Exporting Countries (OPEC) agreed in March to raise output by seven percent.
Traders said a strike affecting production in Norway, the world's second largest exporter, combined with continued uncertainty over OPEC's next production move led to Monday's buying spree.
Norway's 225,000 barrels per day Draugen oilfield was closed at the weekend because of a strike that included workers at the facility.
"At this stage, the market is looking at any excuse to move higher and test upside technical targets once Brent broke $30," a London broker said.
Peter Rehmer, an energy specialist at U.S.-based technical analysts Elliott Wave International, said OPEC needs to see a decisive price move higher before taking action.
"Although the market can't quite seem to believe it crude will need to mount a loud, attention-getting move well above OPEC's $22-$28 band before they start opening the spigots," Rehmer said in a report.
OPEC last week decided against immediately implementing an automatic 500,000 barrels per day (bpd) of extra supply after a basket of OPEC crudes rose above the $28 a barrel threshold that the cartel agreed in March would trigger additional output.
Instead, the group will probably put off any output decisions until their June 21 ministerial session in Vienna, OPEC delegates said.
The uncertainty has left traders confused -- wondering whether OPEC will leave output unchanged, raise output by 500,000 bpd or lift supply by a larger volume.
Last week an OPEC source said leading cartel producer Saudi Arabia was considering a move that would require OPEC to add a much as one million bpd of extra oil.
The influential Middle East Economic Survey on Monday reported that the United States
, the world's largest consumer, is asking OPEC to increase output by more than 500,000 bpd to ease supply concerns during peak gasoline demand season.
The U.S. is believed to want OPEC to roll back 1.35 million bpd of supply restrictions, the volume it cut in June 1998 in a second of three rounds of cartel supply curbs that amounted to 4.3 million bpd altogether between March 1998 and March 1999.