Good news for gentry, cheers, jerry
New York, June 30 (Bloomberg) -- Crude oil surged to a
19-month high after reports that U.S. oil inventories fell
unexpectedly last week, signaling that output cuts by world
producers are reducing a surplus.
Oil supplies fell for the eighth time in 11 weeks, according
to weekly reports from the U.S. Department of Energy and the
American Petroleum Institute. The drop was the latest sign that
OPEC's plan to reduce world supply is paying off. Prices have
rallied 60 percent this year, ending above $19 a barrel today.
''Now that we're here, $20 is certainly possible though I
don't know if the market could sustain that level,'' said Tom
Blakeslee, an oil and gas trader at Eildon Marketing LLC in White
Marsh, Maryland. ''We're finally eating into the overhang that
had been created in the past 18 months. OPEC is showing its
strength.''
Crude oil for August delivery surged 85 cents, or 4.6
Percent, to $19.29 a barrel on the New York Mercantile Exchange,
the highest closing price for a contract nearest to expiration
since Nov. 25, 1997.
It was the biggest one-day gain since March 10, when crude
surged 6.1 percent on the news that a handful of the world's most
important oil ministers would meet in Amsterdam to discuss output
cuts. Those cuts were ratified later that month.
In London, August Brent crude rose 72 cents, or 4.3 percent,
to $17.51 a barrel on the International Petroleum Exchange, the
highest price since Dec. 19, 1997.
U.S. crude oil inventories fell 1.7 million barrels to
330.40 million, the DOE said before trading. The industry-funded
API reported a smaller 488,000 barrel drop in a report late
yesterday. Inventories now are 3 percent smaller than a year ago,
according to API figures.
''The crude drawdown was a surprise,'' said John Kilduff,
senior vice president of energy risk management at Fimat USA Inc.
in New York.
Traders are awaiting independent estimates of the
Organization of Petroleum Exporting Countries' compliance with
promised cuts for June, which will be published in the next few
days. OPEC will achieve more than 90 percent compliance in June,
several Persian Gulf oil officials said this week.
OPEC made 91 percent of its promised cuts in May, up from 83
percent in April, according to a Bloomberg survey of producers,
oil companies and analysts.
Kuwait is ''optimistic about achieving full compliance in
June,'' said Mohammed Zamanan, a spokesman for Kuwait's oil
ministry.
A United Arab Emirates oil ministry spokesman said the
producer expects compliance in June to be higher than last month. |
