Oil Prices Climb on Renewed Concerns

Oil prices broke a two-week slump Tuesday and problems at several U.S. refineries reignited gasoline supply worries.

Crude oil for May delivery climbed $1.92, or 4%, to $52.29 a barrel in trading on the New York Mercantile Exchange. It was the biggest one-day gain since crude oil hit a record closing price of $57.27 on April 1.

New York gasoline futures led the rally, settling up 7.57 cents, or 5%, at $1.57 a gallon.

The increase came amid a spate of refinery troubles in Kansas, Louisiana and Texas, which dealers said could sap a supply buffer ahead of the summer driving season, when demand for gasoline peaks.

“It looks like troubles at refineries are behind the surge in gasoline, and this is pushing up the market,” said Phil Flynn, an analyst at Alaron Trading in Chicago.

The rebound in oil prices ended a two-week slide that had been triggered by rising crude inventories in the United States, additional supply by the Organization of the Petroleum Exporting Countries and signs that strong demand growth, especially in China, is easing. It also came the day after a government survey reported that pump prices in the U.S. and California had eased for the first time in three months.

“More and more people are becoming convinced that oil above $55 is not sustainable in the long term. But a lot of people are willing to come back into the market when prices go below $50,” said David Thurtell, a commodities strategist at Commonwealth Bank of Australia.

President Bush said Tuesday that he would raise concerns about the effects of high energy costs on the global economy when he meets next week with Saudi Crown Prince Abdullah in Texas.

The topic of energy is expected to be high on the agenda when Bush hosts Abdullah at his Crawford ranch Monday. The president said he planned to ask the prince whether it was possible for his country to step up oil production.

“I think they’re near capacity, and so we’ve just got, got to get a straight answer from the government as to what they think their excess capacity is,” Bush said in an interview on CNBC.

The head of OPEC said Monday that the producers’ cartel would pump near 25-year-high levels next month although it would postpone any formal increase in output limits until a June meeting.

Top exporter Saudi Arabia has already told customers to expect more oil in May.

Analysts are predicting that U.S. crude inventories will rise for the 10th straight week when the Energy Information Administration, the statistical arm of the Energy Department, releases fresh data today. Crude stocks are at the highest level since June 2002, and a preliminary Reuters survey of nine analysts forecasts inventories rising by an additional 1.2 million barrels in the week ended Friday.