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Strategies & Market Trends : Mish's Global Economic Trend Analysis -- Ignore unavailable to you. Want to Upgrade?

To: mishedlo who wrote (12455)	9/29/2004 12:47:13 AM
From: mishedlo	Read Replies (1) \| Respond to of 116555

Oil clings to $50, U.S. fuel stocks forecast to fall Wednesday, September 29, 2004 4:08:17 AM reuters.com SINGAPORE, Sept 29 (Reuters) - Oil prices hugged $50 a barrel on Wednesday on worries of potential supply disruptions and with U.S. crude inventories expected to fall due to the lingering effects of Hurricane Ivan. U.S. light crude <CLc1> surged to a record trading high at $50.47 a barrel on Tuesday and settled at an all-time peak of $49.90. It gained 10 cents to $50.00 a barrel on Wednesday. Data issued by the Energy Information Administration at 1430 GMT on Wednesday is expected to show a fall in U.S. crude stocks for the ninth straight week after stormy weather slowed a recovery in output and shipments in the Gulf of Mexico following disruptions from Hurricane Ivan. Ten analysts surveyed by Reuters forecast that U.S. crude stocks, already running at a deficit of 13.8 million barrels compared with a year ago, would decline by an average 3.8 million barrels. The analysts predicted that stocks of distillate fuels would fall by 1.3 million barrels. Distillate stocks include heating oil and normally rise at this time of year ahead of the winter months. "If crude draws that much, I think we'll see another rally," said Tony Nunan at Mitsubishi Corp. in Tokyo, referring to Tuesday's rally that sent prices racing above $50 to the highest levels in the 21-year history of crude futures on the New York Mercantile Exchange. Concerns over a major disruption in the global oil supply chain were heightened this week after rebels fighting for independence in Nigeria said they would declare all-out-war in the oil-producing Niger delta, which pumps all of the country's 2.3 million barrels per day (bpd) of output. HIGHER PRICES Producers are pumping at just about full tilt to feed the fastest growth in oil consumption in 24 years. Worries about supply security in Saudi Arabia, Iraq and Russia have magnified the price surge. "We suspect that the oil price will soon push to $52-$53 a barrel, and possibly higher depending on whether trouble does develop in Nigeria and/or renewed attacks on pipelines in southern Iraq," David Thurtell at Commonwealth Bank of Australia said in a research note. The move above $50 prompted top OPEC exporter Saudi Arabia to announce it would boost its official production capacity by 500,0000 bpd, to 11 million bpd, to help ease supply concerns. The new capacity is not expected to make any immediate impact on actual production with Riyadh already having said it would meet demand for 9.5 million bpd this month and next. The Organisation of the Petroleum Exporting Countries, which controls more than half of global crude exports, is producing at the highest rate since the late 1970s in an effort to control prices, but much of the extra crude is not of the quality best suited for transportation fuels. In real terms, stripping out the impact of inflation, oil prices are now near levels hit during the Arab oil embargo of 1973-4, though much lower than the record $80 annual average high following the 1979 Iranian revolution . A top U.S. Federal Reserve policymaker said on Tuesday high oil prices would probably brake U.S. growth but would not derail the economy provided there was not another spike upward. "As long as oil prices do not rise significantly higher, the likely effects of recent increases will be relatively modest on the U.S. economy," said Kansas City Federal Reserve Bank President Thomas Hoenig. ======================================================= How long can these F*ckheads keep saying this: "As long as oil prices do not rise significantly higher, the likely effects of recent increases will be relatively modest on the U.S. economy," Mish