Oil prices jump again

Opec producers are only slowly opening the taps

The price of a barrel of crude oil has surged back through $30 after the release of new data showing a fall in US stocks for the second week running.

In early trade in London, a barrel of the world benchmark Brent blend was trading at $30.15.

In the US, September crude futures also broke through the $30 a barrel level.

The price rise came after the weekly report from the American Petroleum Institute showed US crude stocks had fallen by 2.1 million barrels in the week ending 4 August.

Unexpected stock drop

This followed an unexpected drop in the stocks of 9 million barrels the week before which had caused prices to leap by $2 a barrel.

The figures were confirmed by the US Energy Information Administration, which lowered its estimate for US crude oil stocks at the close of the third and fourth quarters.

The stocks data surprised most analysts in light of moves to lift production by members of the Organisation of Petroleum Exporting Countries (Opec).

Opec has said that it wants oil prices in a range of $22-28 a barrel and will lift output to meet demand.

However, managing the market to such a fine degree is notoriously difficult, analysts say.

Opec president Ali Rodriguez, who is touring member states, on Monday said in Saudi Arabia that he was satisfied with current oil prices and unconcerned by the level of output rises being implemented by the Gulf state.

The amount of fresh supplies to the market remains uncertain but may not be enough to contain new demand. The Paris-based International Energy Agency on Wednesday said world demand would rise by 1.87 million barrels a day to 77.7 million next year.

Saudis keeps quiet

The Saudi government has remained silent since saying in early July it would raise output by 500,000 barrels a day in an attempt to bring prices closer to its target of $25 a barrel.

Industry sources say Saudi output was ramped up by at least 250,000 barrels a day in late July.

"They [the Saudis] are going about it fairly quietly but are probably more than half way there," said Julian Lee, senior analyst at the Centre for Global Energy Studies (CGES).

The centre's analysts estimate that Saudi production averaged 8.37m barrels a day in July, or 120,000 barrels over the country's Opec quota.

By late July, the world's largest oil producer and exporter was pumping about 8.6m barrels a day, the CGES says.

Market driver

There are too many people crying wolf too much of the time

Paul Stevens, Dundee University

The market for the next few days will be driven by the new US data although volumes will remain thin due to the summer holidays, traders say.

The US "driving season" - when Americans tend to take to the roads in the fine weather, increasing demand for gasoline - is drawing to a close.

Analysts say attention is now focusing on whether there are sufficient supplies of heating oil in the lead up to winter.

However, the US data does not necessarily reflect what is happening elsewhere in the world, says Professor Paul Stevens of Dundee University's Department of Energy, Petroleum & Mineral Law.

"There are too many people crying wolf too much of the time."

Opec summit

Mr Rodriguez, who is also Venezuela's Energy Minister, is touring Opec member states with Venezuelan President Hugo Chavez to issue invitations to an Opec summit in Caracas next month.

After Saudi Arabia, Kuwait and Qatar, the two were also scheduled to visit the United Arab Emirates, Iran, Iraq, Indonesia, Libya, Nigeria and Algeria - where, in 1975, Opec held its last summit.

The US government, meanwhile, has voiced its disapproval of Mr Chavez's plans to visit Iraq.

"We think it is rather a dubious distinction to be the first democratically elected head of state to ... meet ... the dictator of Iraq," State Department spokesman Richard Boucher said.