OIL PRICES BOUNCE BACK AS OPEC SETS MEETING

OIL PRICES BOUNCE BACK AS OPEC SETS MEETING

Crude oil prices came roaring back Thursday after days of steady declines.

The U.S. benchmark crude, West Texas Intermediate, closed at $18.05 a barrel, up $1.09, for May delivery on the New York Mercantile Exchange.This was only the fourth day this month that prices closed higher. Prices are down $2.43 from the beginning of the month.

The ostensible reason for the price recovery was that the Organization of Petroleum Exporting Countries announced its market monitoring committee would meet May 2. OPEC's ministerial meeting is May 25, and analysts had doubted that any high ranking delegation would meet earlier.

It also appeared that WTI was following the London market for North Sea Brent crude, up 80 cents from Wednesday to $17.10 a barrel.

Adding to the uncertainty, the May crude oil futures contract goes off the board today, and the flurry of buying could be covering to meet obligations.

"Prices could go to hell tomorrow (Friday)," said economist Arnold E. Safer, president of Energy Futures Group, Bethesda, Md. "I don't know of any fundamental reason for firming prices. But that's typical. The market's seeing what it will take on the up side."

Refinery runs, while up marginally, are "still not going anywhere, as gasoline demand is flat or down," he pointed out. And crude oil stocks are 51 million barrels above last year at this time.

Peter Beutel, an analyst at Elders Futures, New York, said "OPEC seemed to know when the market was oversold enough. They played this like a fiddle."

Analysts say that prices have been plunging because of deliberate OPEC overproduction, mainly by the key Persian Gulf producers. Saudi Arabia, Kuwait, Iraq and the United Arab Emirates don't want to see prices get too high, lest OPEC lose market share. But the drop was too steep for their liking.

"Over the next three weeks we'll probably see crude inventories drop by 25 million barrels, which puts us back to where we were a year ago," Mr. Beutel said. "It'll seem better, but nothing will have changed. In the meantime, no one can sell with impunity in this market."