Drop in crude reserves sparks gains; France calls for talks with OPEC
September 20, 2000: 7:00 p.m. ET
NEW YORK (CNNfn) - U.S. oil prices bounded to fresh decade highs on Wednesday as new
supply figures underlined fears that the country's pre-winter stock cushion is running
perilously thin.
October crude on the New York Mercantile Exchange (NYMEX) hit a new peak of $37.80 a
barrel, after a weekly government report showed U.S. crude oil stocks fell 2.4 million barrels
from last week and heating oil inventories grew just 630,000 barrels to remain more than a
third below last year's levels.
The report confirmed concerns sparked on Tuesday after a separate report by the American
Petroleum Institute showed that U.S. crude stocks, at about 287 million barrels, were almost 8
percent below the 308 million barrels that were held a year ago.
Profit taking pushed NYMEX prices back late to settle at $37.20, 69 cents up on the day. Cru de
has gained nearly four dollars this month alone,
as renewed tensions between Iraq and the
United States fueled fears that Iraq could shut
off its oil exports in the run-up to November's
U.S. presidential election.
U.S. crude oil inventories are parked near their
lowest level for 24 years, forcing the Clinton
administration to consider an emergency oil
release from the Strategic Petroleum Reserve
(SPR).
"Emergency measures may be imminent," said a research note from Deutsche Bank.
"Extensive political and economic hand-wringing grips Washington as the debate over use of
the SPR is heating up. We now believe a release over the next month is more likely than not to
occur."
With NYMEX prices now in sight of their all-time Gulf War high of $41.15 per barrel, President
Clinton said on Tuesday he wanted a "few more days" to decide whether to tap the
571-million-barrel strategic reserve for only the second time in history.
"Shortly, I suspect, the president will make some decisions," Energy Secretary Bill Richardson
said Wednesday.
Asked Wednesday whether the U.S. government would intervene by releasing crude from the
SPR, White House press secretary Joe Lockhart was noncommittal about the Clinton
administration's plans.
"We are deliberating intensively on the policy options that are available to us," Lockhart said.
"When a decision is made, we will announce it in the appropriate way."
U.S. Treasury Secretary Lawrence Summers said on Wednesday the administration was
closely watching developments in global energy markets. "The oil price situation is obviously
one factor bearing on the global economic outlook," he said.
Prices push trade deficit to record in July
High oil prices helped drive the U.S. trade deficit to a new peak of $31.89 billion in July as
shortfalls with key North American, European and Asian trade partners set fresh records, the
Commerce Department said on Wednesday.
Leaders across the industrialized world are under pressure from local politicians and their
constituents to do something about rising energy costs which have sparked consumer
protests and set inflation fears whirring.
France on Tuesday called for an urgent meeting of OPEC oil producers with the United States
and the European Union to address tight supplies.
French Finance Minister Laurent Fabius said he would propose talks with the Organization of
Petroleum Exporting Countries when finance ministers of the Group of Seven (G-7)
industrialized nations meet in Prague, Czech Republic, on Saturday. The idea would be for an
informal gathering of the United States, the European Union and the oil cartel before a summit
of OPEC heads of state in Caracas, Fabius added.
OPEC on September 10 announced it had decided to ramp up production by an extra 800,000
barrels per day, or three percent. The decision has not convinced traders that supplies will be
adequate to replenish depleted stocks.
OPEC countries reply that only Saudi Arabia now has the spare capacity to increase
production, adding that it is consuming countries' limited refining capacity that is causing the
current price run-up. |
