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

To: mishedlo who wrote (13412)	10/13/2004 4:50:41 PM
From: mishedlo	Respond to of 116555

UPDATE 8-Oil prices surge $1 as winter fears reignite Wednesday, October 13, 2004 7:13:21 PM reuters.com (Updates with settlement prices, paragraph 2; heating oil record, paragraph 11) By Richard Valdmanis NEW YORK, Oct 13 (Reuters) - Oil prices surged more than $1 on Wednesday as worries over tight heating fuel supplies in the U.S. and Europe this winter countered a previous bout of profit-taking by big-money funds. U.S. light, sweet crude <CLc1> was up $1.13 at $53.64 a barrel, erasing losses from a recent sell-off and bringing prices less than $1 below Tuesday's record peak of $54.45. London Brent <LCOc1> gained 45 cents to $50.05 a barrel. Dealers said a deficit in heating oil supplies in the U.S. Northeast, the world's largest heating oil market, and tight inventories in Europe and Asia were rekindling supply fears ahead of the Northern Hemisphere winter. "There's some uncertainty about how this winter is going to shape up and further declines in heating oil stocks will certainly scare this market," said Jim Ritterbusch of Ritterbusch and Associates. The supply worries countered a big drop in crude prices Tuesday, when funds sold down the record futures high on forecasts of slowing demand growth, in line with losses in other commodities markets. U.S. stockpiles of heating oil were 6 percent below 2003 levels last week and have been slow to build due in part to last month's Hurricane Ivan, which damaged oil operations in the Gulf of Mexico. As of Wednesday, more than a quarter of oil production from the Gulf of Mexico remained shut, according to the U.S. Minerals Management Service. The Gulf normally produces about 1.7 million barrels of oil per day. A U.S. government report due Thursday was expected to show distillate stocks in the world's biggest energy consumer down another 1.1 million barrels in the week to Oct. 8, a Reuters poll of 10 analysts showed. Crude stocks, also in deficit versus last year, were seen rising 1.7 million barrels. "We're running out of time to build stocks," said Peter Beutel, analyst at Cameron Hanover. Winter fuel is also in short supply elsewhere around the globe, with European distillate inventories roughly 3.4 percent below last year and kerosene supplies in Japan down 20 percent from 2003. Heating oil futures in New York hit a record $1.50 a gallon Wednesday before settling at $1.4991 a gallon, up 4.46 cents. METALS WEIGH Despite Wednesday's gains, dealers said they have been taking heed of the increasing threat that high energy costs pose for the global economy in the period ahead. Oil demand will expand at a blistering 2.71 million barrels per day (bpd) this year, the fastest in 24 years, but growth will slow to 1.45 million bpd in 2005, weaker than first forecast due to high prices, the International Energy Agency said Tuesday. The agency also warned that China, the engine behind this year's explosive growth in fuel usage, has begun promoting fuel saving-measures and seeking alternatives to oil. Heavy selling by investment funds on London metals markets -- also near multi-year highs as part of the commodity sector's bull run this year -- also weighed on oil, traders said. "Massive liquidation and big falls in base metals are probably exerting some influence on the energy complex," said Barclays Capital in a report. Oil prices Wednesday were supported by disruptions in Nigeria, where saboteurs set fire to a major pipeline operated by Royal Dutch/Shell <SHEL.L><RD.AS>. The outage will only affect 13,000 bpd after other supplies were rerouted. This week's Nigerian general strike over fuel prices in the OPEC member has not hindered its 2.3 million bpd of production. Unions said Tuesday they might extend the strike past Friday, raising the risk to exports. The Nigerian government has sought a court injunction to stop the strike.