OT: Oil and the election. Bloomberg claims it is the Bush admin and war that has driven price higher.
quote.bloomberg.com
Crude Oil Falls for Second Day on U.S. Election Speculation
Nov. 2 (Bloomberg) -- Crude oil futures fell for a second day on speculation a win for Senator John Kerry in the U.S. presidential election may result in an increase in oil supply.
Kerry, who is deadlocked with President George W. Bush in national polls before today's vote, said Oct. 6 he may suspend deliveries to an emergency stockpile known as the Strategic Petroleum Reserve. That may help reduce oil prices that have risen more than 50 percent since Bush took office in January 2001, reaching a record $55.67 a barrel in New York on Oct. 25.
``With a Kerry win, there's talk about him reaching into the SPR, or providing more oil to the market'' by reducing deliveries to the stockpile, said Paul Goodhew, a broker at ABN Amro in London. ``There's still room for the oil market to drift lower from here after the major move down yesterday.''
Brent crude oil for December settlement was down 22 cents at $46.84 a barrel in electronic trading on the International Petroleum Exchange in London at 11:33 a.m., after tumbling $1.92 yesterday. Brent reached $51.95, an intraday record, on Oct. 27.
December light, sweet crude oil on the New York Mercantile Exchange was down 25 cents at $49.88, after falling $1.63 yesterday to its lowest closing price since Oct. 4.
In Dublin, Nymex's January Brent crude oil contract was down 15 cents at $46.80 at 11:22 a.m. Nymex started open-outcry trading in Dublin yesterday, to compete against the IPE's Brent contract, which trades electronically until 2 p.m.
The U.S. election result may be known at the earliest in the early morning hours tomorrow European time.
`Very Bearish'
``A Kerry win would be very bearish for oil,'' said David Thurtell, a commodity strategist at Commonwealth Bank of Australia in Sydney. ``A lot of people have been making a lot of money during the last few months and they're probably feeling a little bit nervous'' going into today's vote, he said.
Bush and Kerry were separated by 3 percentage points or less - - within the margin of error -- in nationwide polls by CNN/USA Today/Gallup, the Wall Street Journal/NBC, the New York Times/CBS, Reuters/Zogby, Fox News the TechnoMetrica Institute of Policy and Politics and Marist College.
A Bush win could boost oil prices on concern the administration may extend its ``war on terror'' in the Middle East to include Iran, holder of the world's second-largest oil reserves, said John Mitchell, Associate Research Fellow of the Sustainable Development Program at Chatham House in London, formerly The Royal Institute of International Affairs.
``This will inevitably be destabilizing, increase the risk of disruption of oil supplies and darken the outlook for medium-term investment to expand oil and gas production capacity for export,'' Mitchell said.
Strategic Reserves
Bush authorized filling the Strategic Petroleum Reserve to its maximum capacity on Nov. 13, 2001. The administration aims to fill the emergency stockpile, the world's largest, to its 727 million- barrel capacity by next summer.
The Energy Department on Oct. 12 said it has to date approved six loans totaling 5.4 million barrels from the reserve to offset supplies lost when Hurricane Ivan hit the Gulf of Mexico in September. Most of the loaned oil must be returned to the reserve before the end of the year, Deputy U.S. Energy Secretary Kyle McSlarrow said last month.
A slowdown in replenishing the reserve may help ease prices because the oil would help build commercial inventories.
The strategic reserve rose by 870,000 barrels per week for the nine months of this year, on average, and fell about 200,000 barrels a week during October because of the hurricane loans.
Traders will pay close attention to heating oil stockpiles when the Energy Department tomorrow issues its weekly report on U.S. oil inventories and production rates.
U.S. Supplies
U.S. distillate supplies, which include heating oil, probably fell 800,000 barrels in the week ended Oct. 29, while crude inventories probably rose 1.9 million barrels, according to the median estimates of 10 analysts surveyed by Bloomberg.
Heating oil futures prices led the plunge in crude oil prices yesterday, partly on speculation inventories are adequate ahead of the winter heating season.
In the U.S. Northeast, the biggest residential heating oil market, heating oil supplies were 11 percent lower than a year earlier on Oct. 22. In New England, a key consuming region that forms part of the Northeast, heating oil stockpiles were 31 percent higher than a year earlier, according to Energy Department figures.
``Wholesalers feel confident that supply going into the season is pretty good,'' Ken Williams, president of Scott-Williams, a heating oil retailer in Quincy, Massachusetts that serves 3,100 homes, said yesterday. ``In New England, we're running ahead of last year. And this is really the heart of home heating oil.''
To contact the reporter on this story:
Stephen Voss in London sev@bloomberg.net
Gavin Evans in Wellington, New Zealand at gavinevans@bloomberg.net
To contact the editor responsible for this story:
Tim Coulter at tcoulter@bloomberg.net
Last Updated: November 2, 2004 06:42 EST |
