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Strategies & Market Trends : VOLTAIRE'S PORCH-MODERATED -- Ignore unavailable to you. Want to Upgrade?

To: lindelgs who wrote (5638)	10/4/2000 4:35:11 PM
From: lindelgs	Respond to of 65232

UPDATE 4-Oil eases as U.S. crude inventories rise (Adds closing price, para 2, SPR announcement, paras 3-5) LONDON, Oct 4 (Reuters) - World oil prices ended sharply lower on Wednesday as fears of a supply crunch eased following a rise in U.S. crude inventories in the world's largest energy market. International benchmark Brent crude futures closed 53 cents lower at $30.52 in London. U.S. light crude futures also took a significant fall of 58 cents to end at $31.49. Shortly after both markets closed, the U.S. Department of Energy made an eagerly awaited announcement on bids for its Strategic Petroleum Reserve (SPR). It said strategic crude reserves, aimed at building heating oil stocks before the peak demand winter season and cooling off prices, would be released starting Wednesday and all of it will be delivered by the end of November. The DOE said 11 companies submitted winning bids to borrow 30 million barrels of crude oil from the nation's emergency oil stockpile. Last month, the White House ordered the loan of 30 million barrels of oil from the nation's emergency reserves Since the Clinton administration announced the plan two weeks ago, U.S. crude oil prices have eased from nearly $38 a barrel to $31.50. OPEC President and Venezuelan Oil Minister Ali Rodriguez said the United States will have difficulty selling crude oil from its emergency stockpile and stressed there was no crude supply problem. "I insist the problem is not crude oil availability, but refining capacity, refinery utilization," he told a radio interview in Venezuela. PRICES SLIP AFTER OIL STOCKS RISE Prices slipped on Wednesday after widely-watched data issued by the American Petroleum Institute (API) industry group showing weekly U.S. crude stocks rising by a big 3.4 million barrels. The losses were limited by other API statistics showing an increase of just 336,000 barrels in distillate stocks, which include heating oil. The distillate stockbuild failed to meet the expectations of the market, which had hoped for a rise of about 800,000 barrels. U.S. distillate stocks are still 28.5 million barrels below levels seen a year ago, stoking fears that heating oil inventories may be insufficient for cold weather demand. The U.S. Department of Energy (DOE) confirmed national crude stocks built last week but the government's rise was less than that shown in Tuesday's API data. Crude oil stocks built just 1.1 million barrels, according to the DOE's statistics arm Energy Information Administration. The EIA reported a 700,000-barrel draw in stocks of distillate, including heating oil, to 114.2 million barrels. IEA WATCHDOG PONDERS OIL STOCKPILES In Paris, the industrialised world's energy watchdog, the International Energy Agency (IEA), on Wednesday urged oil companies to try to supply more heating fuel to alleviate what it called an unusually volatile market. But the IEA signalled its members were ready to release strategic reserves only in the event of significant supply disruption, explaining producers were pumping enough crude to meet world demand despite the market's short-term tightness. Oil prices have fallen from a 10-year peak of $34.98 hit by Brent on September 18, helped by the United States decision to release emergency supplies. But the U.S. administration's move to tap the SPR for the first time since the 1990-1991 Gulf crisis has not solved the critical issue of heating oil stocks. Stocks of that product in the U.S. northeast, the biggest regional user of heating oil, are 70 percent below last year, while national inventories are about 36 percent down. The European Commission said on Tuesday that criteria for the release of strategic reserves by European Union countries -- physical shortages of supply -- had not yet been met. ((London Newsroom, +44 20 7542 7646, fax +44 20 7542 4453, london.energy.desk@reuters.com))