Record high close on oil
Oil ends up on supply worries after Hurricane
Friday, September 24, 2004 7:32:20 PM
reuters.com
(Updates with close, changes dateline from previous LONDON)
NEW YORK, Sept 24 (Reuters) - Oil prices ended higher on Friday, shrugging off a U.S. government move to lend out some strategic crude stocks as traders said the amounts were too small to alleviate supply shortage worries.
Rebel threats to oil infrastructure in Nigeria underpinned the market.
New York light crude <CLc1> ended at a record settlement high of $48.88 a barrel, within sight of the $49.40 intraday trading record set on Aug. 20.
Gains this week now add to nearly $4, helped along by strength in refined products, the focus of dealers' attention in the run up to the peak demand Northern Hemisphere winter.
London Brent crude <LCOX4> ended 20 cents a barrel higher at $45.33. Brent set a new record at $45.75 a barrel on Thursday on nagging fears over a U.S. oil supply shortfall caused by Hurricane Ivan.
IVAN CUTS SUPPLIES
Disruptions due to Hurricane Ivan, together with spiralling prices, have prompted the Bush administration to approve two- to three-week oil loans to refineries from the nation's emergency stockpile. It is considering requests from others.
Ivan has shut down over 10 million barrels of oil and 43 billion cubic feet of natural gas since Sept. 13. Oil production in the U.S. is still down 471,469 barrels per day.
The U.S. Department of Energy said oil major Shell Oil Co and small Louisiana refiner Placid Refining LLC will receive loans from the 670-million-barrel Strategic Petroleum Reserve. Placid will borrow 300,000 million barrels and Shell will get 1.4 million, the DOE said.
The last time Washington loaned oil from the SPR was in late 2002 when Hurricane Lili disrupted shipments.
SPR LOANS TOO SMALL
But traders said the volumes involved were too small to make a difference on the 20 million barrel per day U.S. oil market, and that the loans were being interpreted in a bullish light as a sign that supplies were even tighter than previously thought.
OPEC producers are pumping almost flat out to meet the strongest demand growth in 24 years, but their marginal production increments are mostly of heavy, sour crude, out of favour with refiners.
Supply worries have added to unease. On Friday, a spokesman said multinational oil giant Royal Dutch/Shell had evacuated non-essential staff from two oilfields in Nigeria where troops are fighting a major offensive against rebel militia.
The decision to withdraw 235 workers was taken as a precaution after the company noted troop movements on Thursday around the Soku and Ekulama fields, about 30 miles (40 km) west of the southern city of Port Harcourt. Oil production was not affected.
These factors added to nerves in a tightly stretched market already unnerved by regular attacks on oil infrastructure in Iraq and turmoil at Russian oil giant YUKOS.
U.S. crude oil inventories are at their lowest since Feb. 6 following shipment disruptions due to Hurricane Ivan that have cut down imports by almost 1.5 million barrels per day (bpd) to about 8.4 million bpd. |
