Ray Of Hope At The Pump

OPEC logo on a oil barrel with an oil rig in the background
AP / CBS
Saudi Arabia expects OPEC to endorse its proposals to hike production to 26 million barrels a day to counter uncomfortably high prices for oil, its oil minister was quoted as saying Thursday as the oil cartel began an informal meeting here.

The Saudis have proposed raising OPEC's production 2.5 million barrels a day. Kuwait, Qatar and Nigeria have backed the Saudi plan.

"There won't be opposition at the conference to this," as 26 million barrels per day is the group's actual production this year, Saudi Oil Minister Ali Naimi said in an interview with Thursday's edition of the pan-Arab newspaper Al Hayat.

The interview appeared as the Organization of Petroleum Exporting Countries began an informal meeting in the Lebanese capital on its output policy, to be followed by a formal session in the afternoon.

Gasoline prices in the United States were at record levels.

That should change, whatever OPEC does, said Robert Murphy, a senior vice president at Citigroup Global Markets.

"More often than not, you do see the Memorial Day as a short-term peak in prices," he said. "Now that the Memorial Day has come and is gone, the market should start to focus a little bit more on total inventories and right now our total inventories, if you look at historical levels, are relatively adequate."

Encouraging signals from OPEC that it would raise production had the desired effect of lowering record-high crude prices. But that raised the question of how long they would remain lower.

Oil prices plunged 6 percent on Wednesday. The fall came after the United Arab Emirates and Kuwait pledged to join Saudi Arabia in adding fresh barrels to global supplies.

On futures markets, U.S. light crude oil for July delivery tumbled by $2.37 to $39.96 in New York on Wednesday, a day after settling at $42.33 — the highest settlement price in the contract's 21-year history on the New York Mercantile Exchange. In London, July contracts of Brent crude fell by $2.22 to close at $36.86 on the International Petroleum Exchange.

Growing support for higher limits on OPEC production also contributed to the price drop, as did Saudi efforts to ease fears the country's vital oil facilities are threatened by terror attacks.

But oil showed a partial rebound in light after-hours trading early Thursday, suggesting that doubts were creeping in about whether OPEC would follow through with its promises. By afternoon in the Asian trading day, the price on New York's electronic trading system had risen to $40.72.

That was still well short of U.S. crude prices' record finish Tuesday, which followed a suspected al Qaeda assault at the Saudi oil hub of Khobar. The attack — which killed 22 people, mostly foreign oil workers — stunned markets that were already nervous about stretched oil inventories and Middle East tensions.

"I would say that right now you probably have a $5 to $10 premium in the market, just on fear," Murphy told CBS Radio News.

Naimi stressed Wednesday that Saudi Arabia was taking adequate security measures and restated his goal of pushing down prices.

"I assure you that the kingdom and all OPEC members are concerned ... and we don't want high prices," he said in a speech at the Beirut offices of the U.N. Economic and Social Commission for Western Asia.

Representatives from the OPEC arriving Beirut expressed a common desire to lift their production ceiling.

Under pressure from the United States and other major oil importers, Saudi Arabia has already boosted its actual output by 600,000 barrels a day, independently of OPEC.

The high gas prices in the U.S. have prompted negative, even criminal reactions, reports CBS News Early Show National Correspondent Thalia Assuras: Motorists drive off without paying for their gasoline.

"It's really surprising. You know, you wouldn't think that some people would drive off," Fairfax, Va., gas station attendant Mohammad Zenbrkji said.

But at his station, gas thefts have jumped from perhaps one every two months to one a week.

Deb Hoon, general manager of the Flying J truck stop in Gillette, Wyo., said there have been quite a few gas thefts there recently, and Sheriff Bill Pownall predicts more reports before long, as the summer travel season gets in full swing.

Danville, Va., police say the number of gas drive-offs has more than doubled in the past three months when compared to the same period last year.

Police Lieutenant Mike Mondul said there were 48 reported drive-offs in May, compared to just 21 during the same period last year.