oil piece:
Energy News
11/19 23:22
Crude Oil Steady Near 1-Month High on Concern Over Cold Weather
By Dudley White
Singapore, Nov. 20 (Bloomberg) -- Crude oil was little changed, close to a one-month high, on traders' concern colder weather in the U.S., the world's biggest energy user, will boost demand for heating oil at a time of lean inventories.
Temperatures in New York could drop as low as 24 degrees Fahrenheit by Thursday, from between 44 degrees and 33 degrees on Sunday, Massachusetts-based forecaster Weather Services Corp. said over the weekend. The U.S. East Coast is the biggest market for heating fuel, made from crude oil.
``In the short term, the market is going to be driven by the weather,'' said Gordon Ramsay, an oil and gas analyst at Salomon Smith Barney (Australia) Ltd. in Melbourne. ``A lot of people are focusing on heating oil.''
Crude oil for January delivery gained as much as 37 cents, or 1.1 percent, to $35.40 a barrel in after-hours electronic trading on the New York Mercantile Exchange. It recently traded at $35.37. The previous most-actively traded contract, for December delivery, expired on Friday at $35.45.
The 38 percent gain in prices this year has prompted concern among consumers and producers that high energy costs may curb global economic growth. Officials from the U.S. and Saudi Arabia, the world's largest producer, said at the weekend prices need to fall at least 25 percent to about $25 a barrel.
`Strong Support'
``Twenty to $25 seems to be catching both producers' and consumers' strong support,'' said U.S. Energy Secretary Bill Richardson at a meeting of the world's top 50 oil consuming and producing nations in Riyadh yesterday.
OPEC's 11 producer members, which have raised output four times this year by a total 3.7 million barrels a day, are now producing at their highest level in 21 years as they aim to reduce crude oil prices to between $22 to $28 a barrel.
The increases have caused world production to exceed demand by 1.8 million barrels a day, the International Energy Agency, which monitors oil markets for 25 industrialized nations, said last week.
Still, a shortage of crude oil processing capacity in the U.S. has led to a drop in heating fuel supplies just at the onset of winter.
U.S. inventories of heating oil fell 665,000 barrels, or 1.4 percent, to 48.8 million barrels in the week ended Nov. 10, the American Petroleum Institute said last week. The API will release its next report on inventories after the close of trading in New York tomorrow.
Prices are likely to drop next year, though, after members of the Organization of Petroleum Exporting Countries promised adequate oil supplies to meet any emergencies and as demand wanes in the second quarter, after the northern hemisphere winter, Salomon's Ramsay said.
Saudi Pledge
Saudi Arabia, the world's biggest producer, yesterday pledged that global oil markets will have enough oil and will raise supply in case of any political acts that disrupt output.
The kingdom, which pumps more than 10 percent of the world's oil, can add a further 1.8 million barrels of oil to world markets within 90 days, Saudi Oil Minister Ali al-Naimi said at a briefing in Riyadh.
``Saudi Arabia has always said, and continues to say, that we are ready to produce what it takes to bring stability to the market,'' al-Naimi said. ``We have said that if there are any shortages due to either disasters or political disruptions ... then, yes, there will be increased production.''
The U.S. too said it may tap more oil from its Strategic Petroleum Reserve to make up any supply shortage.
The statement from Secretary Richardson came after Iraq, which pumps 2.5 million barrels a day as OPEC's fourth-largest oil producer, said last week that it would cut off any of its crude customers who refused to pay an extra 50 cents a barrel starting next month into a bank account outside of the control of the United Nations oil-for-food program.
Still, OPEC members declined to commit themselves to further output gains until they meet Jan. 17 to assess winter demand. OPEC has on several occasions blamed high oil prices on high gasoline taxes in Europe and other developed countries, and refining shortages in the U.S.
``Price is only an indication, it's not the whole story,'' said Saudi Arabia's al-Naimi yesterday. ``Political tensions in the Middle East, refining limitations in the U.S. and speculation were other factors that we have to take into consideration,'' he said. |
