Price of crude expected to remain in $40 to $50 range all year

| 2/24/2005

As crude oil hit a three-month high this week – reaching $51.80 Thursday morning – the Saudi Arabian oil minister predicted that the price would remain between $40 and $50 a barrel for the rest of this year.

But the price of crude started slipping midday after the U.S. government reported on stockpiles of crude, gasoline and heating oil, according to reports from Reuters and The Associated Press.

The U.S. Energy Department reported Thursday, Feb. 24, that the inventory of crude last week was 297 billion barrels, which is 8 percent higher than levels at this time a year ago. However, the supply of distillates, which includes diesel, heating oil and jet fuel, dropped by 700,000 barrels to 111.8 million barrels on hand. That’s 3.5 percent less than the level last year at this time.

Saudi Arabia’s oil minister, Ali al-Naimi, told CNBC-TV Thursday that he was reluctant to make a prediction for the remainder of this year, but said that “where the price is today between $40 and $50 will probably be with us throughout 2005” because of the inventories, supply and demand on the worldwide market.

Crude hit its high of $55.17 on Oct. 26, 2004. According to Bloomberg Media crude futures hit $51.85 Thursday, the highest intraday price since Nov. 1, 2004. Futures are 50 percent higher now than they were a year ago.