<Oil Holds Near $55 on Winter Fuel Anxiety
Friday October 15, 8:26 am ET
By Jonathan Leff
LONDON (Reuters) - Oil prices held strong on Friday not far below the $55-a-barrel mark as traders worried time is running out to top up low heating oil inventories before winter.
U.S. light crude dipped 18 cents to $54.58 a barrel after setting a new all-time high on Thursday of $54.88. London Brent eased 29 cents to $49.80 a barrel. "It doesn't really matter where prices are -- so long as supply-demand fundamentals remain tight and inventories remain low prices will stay strong or strengthen," said London energy consultant Geoff Pyne. "High prices have had little effect on demand so far." U.S. Federal Reserve Chairman Alan Greenspan is due to give a speech on oil at noon EDT. Dealers are expecting some analysis of the impact of higher energy costs on the economic growth that has helped fuel this year's rise in crude prices.
Oil is up $20 in less than four months, lately spurred on by a U.S. Gulf of Mexico production outage that has exacerbated a global shortage of light, low-sulfur crude that is easy to refine for transport and heating fuels.
About 470,000 barrels per day (bpd) of crude production remains shut more than a month after Hurricane Ivan. Some fields are expected to remain shut beyond the end of the year, the government's resource agency said this week.
The shortfall has impeded refiners' ability to build up U.S. heating oil stocks which at 50 million barrels are 10 percent below last year, weekly government data showed on Thursday.
U.S. heating oil futures set a new record of $1.5520 a gallon on Friday before easing to $1.5410.
Heating oil supplies in the U.S. Central Atlantic region, a major distribution point for the heavy consuming U.S. Northeast, are running well below average.
"If, indeed, heating oil inventories have peaked for this key region, then there is little likelihood that heating oil prices will ease significantly this winter," the Energy Information Administration said on Thursday.
The shortage is also evident in other major regions, with consumers in Germany, Europe's biggest market, keeping supplies of heating oil well below last year due to high prices.
German end-user tanks were only 60 percent full at the start of this month versus 68 percent last year, traders said, while in Japan, the world's third-biggest energy user, kerosene supplies are more than 15 percent below last year.
As fears of a winter fuel squeeze dominate traders' near-term perspective, some see signs emerging that China's massive oil thirst -- a major factor in this year's price spike -- could slacken as the government moves to prevent the booming economy overheating.
Double-digit oil demand growth from China, now the world's second-biggest importer, took the world by surprise this year, stretching OPEC (News - Websites) supplies to the limit.
The International Energy Agency said this week that increased costs were encouraging conservation measures in China and fuel switching away from oil.
But high prices appear to have done little so far to deter demand from the fast-growing Indian economy.
State Indian Oil Corp said on Friday its crude imports in the fiscal year 2005-2006 were likely to rise 12 percent to 37 million tons.
India's crude imports in the fiscal year so far from April to end-September are up 7 percent to 16 million tons.>
biz.yahoo.com |
