Diesel continues surge, oil drops

| Monday, March 14, 2005

The national average price-per-gallon for diesel fuel increased Monday, March 14, to $2.194 from last week’s average of $2.168, the Department of Energy reported.

It is the fourth straight week the national average price of diesel has been above $2 a gallon; fuel is now running about 17 cents higher than the average three weeks ago.

The highest average prices in the nation are found in the West Coast region, where the average cost is $2.442.

The biggest jump was in the Lower Atlantic region, where the average price per gallon jumped more than 3 cents to $2.137.

Among the higher average prices, by region, were California at $2.418; New England, at $2.320; the Central Atlantic region, at $2.309; and the Rocky Mountain region, at $2.260.

Other prices included the East Coast region, at $2.197; the Midwest region, at $2.140; and the Gulf Coast region, at $2.130.

Meanwhile, crude oil prices fell Monday after the president of OPEC said the group would likely raise its output ceiling by 500,000 barrels a day if prices stay at current levels.

Light, sweet crude for delivery in April dropped 38 cents to $54.05 a barrel in afternoon trading on the New York Mercantile Exchange. Heating oil fell more than a penny to $1.532 a gallon.

Crude oil prices on the New York exchange have shot up by nearly 20 percent in the past five weeks to around $54 a barrel – a little more than a dollar shy of all-time record set in October 2004 – putting pressure on OPEC to take action, The Associated Press reported.

Oil ministers had signaled the cartel was likely to keep its output quotas steady and merely agree to produce more oil when it meets Wednesday on production policy for the spring. But Saudi Arabian Oil Minister Ali Naimi called for a formal increase in quotas Monday, The AP reported, and OPEC’s president, Kuwaiti energy minister Sheik Ahmd Fahd Al Sabah, signaled that the idea of an increase was gaining ground.

“If the prices continue at the present rate, then we will increase our production,” Al Sabah told news reporters Monday. “If necessary, we will increase by 500,000.”

OPEC could also keep its output ceiling unchanged, Al Sabah said.

Oil inventories typically rise in the second quarter in what is traditionally the weakest season of the year for oil demand, he added.

Victor Shum, an oil analyst at Texas-based Purvin & Gertz in Singapore, told The AP prices would stay above the $50 barrel level.

“The strength of demand means that any downward correction would not be significant,” he said.

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