$35.65 Oil 9/15/2000:
Reuters Finance News
U.S. Oil Above $35 As Clinton Reassures
By Matthew Robinson Sep 15 1:13pm ET
NEW YORK (Reuters) - Upbeat comments from President Clinton on the U.S. economy's resilience to rising energy costs sent U.S. oil prices surging above $35 a barrel Friday as traders interpreted it as a sign that he would not tap strategic reserves.
October crude oil on the New York Mercantile Exchange (NYMEX) traded up to $35.65 a barrel, up $1.58 and just 20 cents below the post-Gulf War highs struck earlier this week.
``I think in the short to medium term, the answer... is no,'' Clinton told reporters when asked if Americans should be worried that high oil prices could lead the United States into an economic recession.
Dismissing similarities between the current high price environment and the oil shock of the 1970s, Clinton said that the U.S. economy was far less ``energy intensive'' than it was 25 years ago.
Traders, already bullish Friday on flaring tensions between Iraq and Kuwait, interpreted the Clinton statement to mean there would be no emergency release of oil from the U.S. Strategic Petroleum Reserve (SPR) to calm prices.
The administration had been eyeing the market to see how it reacted to the latest production increase by the Organization of Petroleum Exporting Countries (OPEC) announced last week before making a decision on the SPR.
After dipping back early in the week to $32 on evidence that more OPEC oil was on offer, oil prices have raced back near post-Gulf war highs as Iraq replayed accusations used to justify the invasion of Kuwait 10 years ago.
Iraq has claimed that Kuwait is again stealing oil by drilling along their border, threatening unspecified recourse.
Kuwait responded that it was only producing oil from within its boundaries. The United States issued a warning to Baghdad, also accusing it of recent violations of Saudi Arabia's airspace.
Concerns that a tropical depression hanging over the Mexico's offshore oil fields near the Yucatan Peninsula could develop into a hurricane fueled bullish sentiments further.
With one-fifth of U.S. domestic oil production and one quarter of natural gas supplies coming from the Gulf of Mexico, the market is wary of any disruption, especially as the winter energy outlook tightens.
Running at full steam just to keep up with this summer's record driving season, refiners continue to run full throttle as neglected U.S. heating oil stocks hover dangerously low.
Some refiners, encouraged by high returns, are now putting off October maintenance, leaving them more susceptible to unplanned outages. |
