New York Crude Oil Tops $30 a Barrel for First Time Since Persian Gulf War
By Josh P. Hamilton
Crude Oil Rises Above $30/Barrel to 9-Year High on Low Supplies
New York, Feb. 14 (Bloomberg) -- Crude oil soared, rising above $30 a barrel for the first time since the Persian Gulf War in 1991, on speculation that producers may not boost output enough to avert shortages.
Some oil exporters such as Venezuela now propose raising production after an output-cutting agreement expires at the end of March. Still, U.S. crude oil inventories are close to a 23-year low, and that could translate into scarce gasoline supplies in coming months, traders said. ``Even if we get some additional output, there's an imbalance and it could take some time to get new supplies into the market,' said Tom Bentz, a broker at Paribas Futures Inc. in New York.
Crude oil for March delivery rose 81 cents, or 2.8 percent, to $30.25 a barrel on the New York Mercantile Exchange, the highest closing price since January 1991. Oil is up 18 percent this year and has more than doubled from a year ago.
In London, Brent crude oil for March settlement rose 94 cents, or 3.4 percent, to $28.76 a barrel on the International Petroleum Exchange, also a nine-year high. It was the contract's last day of trading.
Members of the Organization of Petroleum Exporting Countries, along with non-OPEC producers such as Mexico and Norway, agreed last March to trim daily supply by about 7 percent to erode a global surplus that had been keeping prices low.
A Venezuelan oil official said last week that his country will ask fellow OPEC members to boost oil supply by more than 1 million barrels a day before June. Venezuela is OPEC's third-biggest producer, after Saudi Arabia and Iran. ``Even a million (barrels) a day is not that much,' said Chester Irvin, a trader at ABN Amro Inc. in New York.
Company Shares Gain
Oil industry shares rose along with crude oil. Exxon Mobil Corp. gained 2 9/16 to 76 7/16 and Apache Corp. rose 2 to 37 3/4, while oil services company Halliburton Co. rose 1 11/16 to 35 15/16. Among the 88 industry groups that make up the Standard & Poor's 500 index, the oil and gas drilling index was today's fourth-biggest gainer. ``We are reaping the benefit of higher cash flow,' said Raymond Plank, chairman and founder of Apache Corp., a $4 billion oil exploration and production company in Houston. Still, ``$30 is in excess of that which the cartel believes is sustainable, so I believe they will elect to increase production moderately,' he said.
Inventories in the biggest consuming nations fell in December and will drop further in the next two months, threatening to force refineries to curtail operations, according to a monthly report Friday from the International Energy Agency, an autonomous group linked to the Organization for Economic Cooperation and Development.
Crude oil supplies in the U.S., the biggest consuming nation, fell to a 23-year low of 282.6 million barrels in the last week of January, before rising 689,000 barrels last week, according to the industry-funded American Petroleum Institute.
Retail Gasoline Rises
The average U.S. pump price for regular, self-serve gasoline
jumped 3.1 cents to a nine-year high of $1.356 a gallon in the
week ended today, according to a Department of Energy survey of
800 filling stations.
U.S. gasoline inventories of about 200 million barrels two
weeks ago were the lowest for the end of January in more than 15
years, and with refineries operating at their lowest levels since
1993, traders speculate that inventories won't rise fast enough to
meet warm-weather driving demand.
Gasoline for March delivery rose 2.34 cents, or 2.9 percent,
to 83.41 cents a gallon on the Nymex, the highest price since
January 1991. Gasoline prices have gained 21 percent so far this
year.
Heating oil for March delivery rose 1.46 cents, or 2 percent,
to 75.70 cents a gallon. Prices now are up 9.7 percent this year,
though the February futures contract touched $1 a gallon before it
expired last month.
Saudi Arabia, the world's oil top producer, Venezuela and non-
OPEC Mexico will meet March 2 to discuss whether to continue the
output cuts, Mexican energy secretary Luis Tellez said.
Those three orchestrated last year's production-cutting
agreement and any decision by them could signal the direction the
full membership of OPEC takes on production when it gathers in
Vienna on March 27, traders said. |
