China becomes the 5th biggest oil producer

PARIS/SINGAPORE: Russia was the biggest crude oil producer in the world in the first quarter of 2008, extracting 9.5 million barrels per day (mbpd), ahead of Saudi Arabia at 9.2mbpd, the International Energy Agency said on Wednesday.

The IEA ranks the US as the third-biggest producer with 5.1mbpd, followed by Iran, pumping 4mbpd. China is in fifth place with output of 3.8mbpd.

Meanwhile, crude oil rose more than $4 a barrel after a US government report on Wednesday showed that inventories declined more than expected, increasing concern stockpiles may be strained during the summer driving season.

Supplies fell 4.56 million barrels to 302.2 million last week, the Energy Department said. Prices also climbed because China said oil imports increased 25% last month as the country recovers from an earthquake, and as tensions rose between Iran, Opec's second-largest oil producer, and the US.

''It's clear that refiners are using the inventories that they have on hand to meet demand,'' said Bill O'Grady, director of fundamental futures research at Wachovia Securities in St. Louis. ''China is still growing strongly and Chinese consumers don't feel the entire increase in prices.'' Crude oil for July delivery rose $4.46, or 3.4 percent, to $135.77 a barrel at 11:40 a.m. on the New York Mercantile Exchange. Futures reached a record $139.12 a barrel on June 6.

Prices slumped 5.2% in the past two sessions, the biggest two-day decline in 11 weeks. Futures have doubled in 12 months as investors looking to hedge against the dollar's drop helped push oil, gold and corn to records this year. China's crude-oil imports jumped 25% last month from a year earlier as refiners boosted fuel production to meet higher demand in southwestern regions rattled by an earthquake. Imports rose to 16.2 million metric tons in May, or about 3.8 million barrels a day, the Beijing-based Customs General Administration of China said on its Web site on Wednesday.

US crude-oil stockpiles fell 7.2% in the past four weeks, the department said. The department released its weekly report on inventories at 10:35 a.m. in Washington.

"The main focus is the drop in crude stocks,'' said Jim Ritterbusch of Galena, energy consulting firm.

(The Times of India)