Crude Oil Rises to Near 3-Year High as OPEC Expected to Extend Output Cuts
London, Nov. 15 (Bloomberg) -- Crude oil rose to its
highest level in almost three years on traders' expectations the
world's biggest oil-exporting nations will keep output
restrained beyond March.
The United Arab Emirates' oil minister said at the weekend
that the Organization of Petroleum Exporting Countries would
likely extend output cuts beyond the end of the first quarter
next year. The cuts, amounting to some 7 percent of world
supply, have helped prices more than double since dropping to a
12-year low in December.
``OPEC realizes intervention works,' said Jurjen Lunshof,
an analyst at Credit Lyonnais Securities. ``They don't want to
turn the clock back now that they have regained control over the
market.'
Crude oil for December settlement gained as much as 29
cents to $24.88 a barrel on the International Petroleum
Exchange, its highest price since Jan. 1997. Crude oil for
December delivery on the New York Mercantile Exchange was 25
cents higher at $25.16 a barrel in electronic trading.
Gasoil for December delivery on the IPE rose as much as $6,
or 3 percent, to $206.50 per metric ton, also its highest level
since January 1997. Gasoil is a group of fuels made from crude
that includes heating oil.
The gain in crude oil boosted some oil companies' shares in
Europe. Shell Transport & Trading rose as much as 8 pence, or
1.6 percent, to 495 pence; Total Fina SA gained as much as 2.4
euro, or 1.9 percent, to 131.4 euros; and BP Amoco climbed as
much as 7 pence, or 1.2 percent, to 620 pence.
``There is wide support among OPEC members to extend the
current output cuts,' said U.A.E. oil minister Obeid bin Seif
al-Nasseri, according to the country's official WAM news agency
yesterday. ``In March we will be able to take the appropriate
decision.'
OPEC, plus four other nations including Mexico and Norway,
have agreed to keep the cuts, based on February 1998 levels, in
place until April to ensure that a surplus of oil is eliminated.
The International Energy Agency said last week that
inventories of oil and oil products in developed countries fell
1.8 million barrels a day in September, reducing the total by 4
percent.
Available global stockpiles of crude oil and other
petroleum products now amounts to about 81 days of consumption,
down from 86 days at the beginning of the year and their lowest
level since late 1997, according to London's Centre for Global
Energy Studies, which considers 80 days the normal level.
``Inventories are going to be lower by the end of December,
so they could be very low by the end of March,' said Lunshof.
``The market is looking ahead to further tightening of
supplies.' |
