NEW YORK - World oil prices rose to a four-month high Monday after rebounding from an earlier sell-off sparked by profit-taking and calming comments from the OPEC president.
New York's main contract, light sweet crude for delivery in April, rose 11 cents to close at 53.89 dollars, its strongest finish since October 26.
It had surged by as much as 2.15 dollars to 55.20 dollars a barrel last Thursday -- a level approaching the all-time high of 55.67 hit on October 25.
But for much of the day in London, oil prices had dipped as traders took profits on that rally and after OPEC president Sheikh Sabah Al-Ahmed Al-Sabah said the 11-member oil cartel was committed to maintaining stability and adequate supplies.
"There was no follow-through to the selling, prompting some short-covering," Fimat analyst Mike Fitzpatrick said.
"People are afraid to remain short because of all the speculative money in the market," he said.
Sheikh Al-Sabah had noted that the cartel had watched the OPEC reference basket price of oil rise by more than 8.50 dollars a barrel since February 8 to 48.36 dollars on Friday.
"OPEC is concerned about this price development despite the fact that the market is well supplied and global crude oil stocks have continued to build, now standing above their five-year average.
"OPEC is committed to maintaining stability and ensuring that global markets remain well supplied at all times," he said in a statement. "Towards this end, OPEC has increased production levels three times during 2004.
"Currently the organisation is producing around 29.5 million barrels per day which has ensured that demand is fully met."
Analysts said the comments were meant to calm the market after prices rocketed Thursday on speculative buying that was sparked by concern over tight supplies and strong global demand.
"They are just trying to talk down the market by promising stability. They are just saying that to keep the market happy," Investec analyst Bruce Evers said in London.
The statement also said that OPEC's spare capacity now stood at more than two million barrels per day and should exceed three million barrels by the end of the year "with further capacity expansions expected in coming years".
OPEC member states are "satisfied" with current crude prices and production levels are likely to remain unchanged when the cartel meets again next week, Iran's OPEC representative said Monday.
"We are satisfied with the current price level and we don't think we should go back to the price range of 25 dollars a barrel," Hossein Kazempour Ardebili told reporters.
Nigerian President Olusegun Obasanjo called on OPEC to help reduce soaring crude prices amid signs that the world market was already cooling.
"Excessive and volatile oil prices are not in the best interests of producers and consumers," Obasanjo said.
Nigeria is OPEC's fourth largest producer.
The comments came as the 11-nation cartel prepared to meet on March 16 in Isfahan, Iran.
03/07/2005 21:10 GMT