U.S. oil clings near $47 on expected supply drop
Wednesday, September 22, 2004 4:22:08 AM
reuters.com
By Tanya Pang
SINGAPORE, Sept 22 (Reuters) - U.S. oil prices hovered near $47 a barrel on Wednesday, awaiting data that was expected to show a big drop in fuel stocks in the United States due to weather-related disruptions to output and shipments.
Heating oil futures remained strong, not far below record levels and dealers said concerns were growing that stocks of heating fuels in Japan, the United States and Europe could prove inadequate for the upcoming northern hemisphere winter.
U.S. light crude <CLc1> rose to a peak at $47.04 a barrel, just $2.36 off the all-time high at $49.40 struck on Aug. 20. At 0403 GMT, crude had eased to $46.94, up 18 cents on the day.
U.S. heating oil futures <HOc1> were at $1.3070 a gallon, a rise of 0.41 cents and just below the all-time peak at $1.3100 on Feb. 28, 2003.
"Heating oil is very strong, it's leading the way. There's definitely some nervousness growing that the products, the middle distillates, won't be there for winter," said John Brady, an energy broker at ABN AMRO in New York.
Industry analysts are expecting U.S. crude inventories to drop by a hefty 5.5 million barrels for the week to Sept. 17 when the government Energy Information Administration (EIA) releases its weekly oil report at 1430 GMT on Wednesday.
All oil stocks are expected to fall after Hurricane Ivan delayed imports into the world's biggest consumer and disrupted crude production in the Gulf of Mexico and refinery operations on the U.S. Gulf Coast.
The fall in crude tanks, if proved accurate, would be the eighth in as many weeks and would take stocks to a deficit of more than 8 million barrels versus the same 2003 period.
A Reuters poll of 11 analysts also predicted that distillate inventories, which include heating oil, would decline by 1.1 million barrels and gasoline tanks would slide by 1.9 million barrels.
HEATING FUEL SUPPLIES TIGHT
"We are very worried by heating oil supplies in Japan, the United States and Europe. We're already at $47 for U.S. crude before winter, another attack on the record at $49.40 is possible over the next few months," said Tetsu Emori, chief commodities strategist at Mitsui Bussan Futures in Tokyo.
Japanese kerosene stocks, used for heating in winter, languish almost 30 percent below year-ago levels, while European middle distillate inventories at the end of August were 3 percent, or 11 million barrels, below a year ago, data from the Euroilstock Foundation showed on Tuesday.
Shipping sources have also indicated that oil products shipments from Venezuela's Amuay-Cardon refining complex have slowed due to output problems. Venezuela, the world's No. 5 oil exporter, is a top supplier into the United States.
Oil prices rose earlier this week after Russia's top exporter, YUKOS <YUKO.MM><YUKO.RTS>, suspended crude sales of about 1 million tonnes (7.33 million barrels) for the rest of the year to China, the second-biggest oil consumer, due to its financial problems with Russian tax authorities.
China's imports of crude oil have jumped about 40 percent this year to fuel its surging economy, which industry analysts say is partly behind run up in oil prices since the end of 2003, when U.S. crude stood at about $32.50 a barrel.
Supply worries are also underpinned by continued violence in Iraq and attacks on its oil infrastructure, as well as rising tensions between Iran and the United Nations over Tehran's nuclear ambitions. Iraq and Iran are both OPEC producers.
The Organisation of the Petroleum Exporting Countries is pumping close to 30 million barrels per day (bpd), levels not seen since the late 1970s, in an effort to cool oil prices.
Global crude production is close to its limits with only top exporter, Saudi Arabia, with any significant spare capacity of about 1 million bpd. |
