Posted on 11/07/2007 5:42:44 AM PST by thackney
VIENNA, Austria — Oil prices jumped above $98 a barrel today, a new record, amid expectations of declining U.S. supplies. The falling dollar and OPEC's apparent reluctance to pump more crude into the market also boosted prices.
Light, sweet crude for December delivery surge $1.25 to $97.95 a barrel by midday in Europe after earlier reaching as high as a record $98.62 in electronic trading on the New York Mercantile Exchange.
The contract hit a high of $97.10 Tuesday before closing at $96.70 a barrel, a record settlement 66 percent higher than the close on the first trading day of the year.
In London, Brent crude rose $1.31 to $94.57 a barrel on the ICE Futures exchange. A number of North Sea oil platforms were evacuated Tuesday ahead of expected severe weather, and BP PLC said it expects to shut production Thursday from its Valhall oil and gas field.
"The oil market sentiment remains bullish ... there is an overall upward trend toward the $100 level," said Victor Shum, energy analyst with Purvin & Gertz in Singapore. "Meanwhile, we can expect extreme volatility where on the one hand some traders will take profit while others will buy back positions."
Traders remain worried about whether supplies will be adequate to meet demand for heating fuel in the approaching Northern Hemisphere winter. News of an attack Monday on an oil pipeline in Yemen added to those concerns.
Figures to be released later Wednesday by the U.S. Energy Department's Energy Information Administration are expected to show crude supplies dropped last week. Analysts surveyed by Dow Jones Newswires predict, on average, that crude oil inventories fell by 1.6 million barrels.
"The price rise is really driven by expectations of drawdowns in crude oil and distillate stocks inventories in the U.S. inventory report," said Shum. "Some cold weather reports out of the U.S. and Europe serve as a reminder that winter is coming and that there are still supply concerns."
On Tuesday, the U.S. Department of Energy's EIA said oil stocks in the countries of the Organization for Economic Cooperation and Development are forecast to fall this winter, ending the year at the lowest level since January 2005.
In London, International Energy Agency head Nobuo Tanaka said he shared those concerns.
"We very much share the same opinions as the EIA (U.S. Energy Information Administration) on inventories heading into the fourth quarter — the stocks situation continues to tighten," Tanaka told Dow Jones Newswires at the release in London of the agency's long-term energy outlook.
"Stocks need to be higher, something that is in the power of producer countries to address," Tanaka later told a news conference.
According to the Paris-based IEA, consumers and governments globally are currently doing too little to improve energy supply security and cut pollution. In its annual outlook for energy through 2030, the agency said the next 10 years are critical for governments globally to address these challenges as energy demand surges in the booming economies of China and India.
Continuing strong global oil demand and lower-than-expected output from countries outside the Organization of Petroleum Exporting Countries will put more reliance on supplies from OPEC and global inventories, the U.S.' EIA said in its short-term outlook.
Any reduction in oil inventories is likely due to a suspension of output at Mexico's state oil company Petroleos Mexicanos, a major crude exporter to the United States, which temporarily shut its ports last week due to severe weather.
The weak U.S. dollar, which fell to another new low against the euro Wednesday, is also lifting oil prices. Oil futures offer a hedge against a weak dollar, and oil futures bought and sold in dollars are more attractive to foreign investors when the dollar is falling.
In Vienna, PVM Oil Associates noted another potential bullish factor, saying that — despite record prices — OPEC "has not shown any intention of increasing supplies on top of the 5,000,000 b/d (barrel a day) hike, which became effective at the beginning of this month."
Analysts also expect the EIA to report Wednesday that gasoline inventories rose by 200,000 barrels during the week ended Nov. 2, while supplies of distillates, which include heating oil and diesel fuel, fell by 500,000 barrels.
Heating oil futures added 2.75 cents to $2.6353 a gallon (3.8 liters) while gasoline prices rose 2.23 cents to $2.4573 a gallon. Natural gas futures rose 5.3 cents to $7.916 per 1,000 cubic feet.
The analysts expect that refinery use grew by 0.8 percentage point to 87 percent of capacity.
You’ve got an excellent point.
After this Christmas, the bubble bursts.
Dollar is down, it is cheap for them to buy oil with dollars and they are trading it just like one would expect.
Where's Grandma Polosi on this. She claimed before the last election, elect Dims and "we will take care of the price of gas for you."
I guess she was SERIOUS about that!
“I bet that if we just pass (not even get there)a bill allowing drilling in ANWR, the price drops a good $20.”
Not sure if it would be that much, but it would drop. OPEC watches what the US does closely. Anytime we make a move to exploit our own resources, they drop the price of oil as a disincentive. OPEC is the dealer, we are the addict.
I remember when they told us that oil would be gone by 2010. No more oil, none, zero, zip. Now, that lie is exposed so they tell us it’s bad to drill, and that it contributes to globull warming.
I wish my fellow Americans weren’t so stupid.
KUDOS!!!! Billion here and a billion there can sure sway futures contracts, with t-Bone Pickens as your media mouthpiece.
Two weeks ago a refinery in Germany shut down due to the glut of oil and petrol.
I think it’s a combination of factors.
Yes, profits are high.
Yes, it’s largely due to speculation.
Yes, the falling dollar has an effect.
Yes, there is increased demand.
Yes, we need to drill for our own oil.
Yes, we need more refinery capacity.
It’s not just one reason.
I know that was meant as sarcasm and we all know there are allot of contributing factors and plenty of blame to spread around all over Washington. But when Bush took office it was at $25 a barrel and he is the man in charge and the most logical target for complaints.
Do you have a link to that claim? How does a glut of oil effect a refinery other than to REDUCE the price of oil as its feedstock?
I can tell you right now, I know 3 folk within state political circles at high levels on both sides of the aisle, that aren't friends, don't associate, don't work together and they're telling me basically the same thing:
They are scared of the magnitude of what's unfolding for 'the crash' and have been told by business leaders and the higher up politicals than themselves, that the Feds and Wall Street, along with the MSM are purposely delaying information and have been told 'not to discuss it on the job. Period. Because the information from reliable sources is at best, seriously conflicting.'
Also, even their investment brokers are confused for solid domestic investment other than foreign corporations and currency at this time.
You do know that madam pelosi's comgress has lower aprroval ratings than Bush does.
“This is not being negative, but, realistic as to the magnitude of our greed and arrogance.”
You might want to add ignorance to that list.
I WAS JUST WATCHING FOX NEWS AND THEY WAS SAYING A BIG GURU WAS SAYING $100.00 OIL WAS NO PROBLEM MY RESPONDS WAS HELL NO ITS NOT A PROBLEM WHEN YOU ARE MAKING A MILLION OR MORE A YEAR , HOW ABOUT THE LITTLE MAN WHAT A FREAKING JOKE DO THEY THINK WE ARE REALLY THAT STUPID.
Does Mexico have refineries? Or, just oil?
Yes they do, or they are that out of touch on Wall Street and in Washington. My families budget has been cut back already.
Mexico has some refineries, about 1.5 million barrel per day capacity. We import extremely little refined products from Mexico.
World Crude Oil Distillation Capacity, January 1, 1970 - January 1, 2007
http://www.eia.doe.gov/pub/international/iealf/table36.xls
Weak dollar reflected in the prices....mucho speculation on the trading floors and increasing demand....surprised?
“Yes they do, or they are that out of touch on Wall Street and in Washington. My families budget has been cut back already.”
They don’t know, or care if we’re stupid, but they do know we are powerless. They’ll do as they please. However, as you state, your budget has been cut back. Unlike our government, most people quit spending when costs go up. The result will be less economic activity as people try to pay for necessities. Less activity by the consumer, less profits for big business and those on Wall Street.
That’s when they’ll figure out that $100 a barrel does matter.
Blah,blah,blah...The simple truth is that futures speculators are driving the price up and up. This price is currently unsupportable and at some point will hopefully correct itself...of course at some point this price will become market supportable if we don't get off our a$$es and do something about it! GRRRRR!
Impeaching the vice president for talking mean to Iran is apparently more important...
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.