Thursday, August 11, 2005

Oil sets record above $65 

But crude pulls away from mark; high prices seen continuing indefinitely.

SINGAPORE (Reuters) - Oil prices raced above $65 early Thursday as tightening U.S. gasoline supplies added to anxiety over refinery snags and stability of crude supplies in the Middle East and North Sea.

U.S. light sweet crude for September delivery was down 37 cents to $64.53, after touching a record-high of $65.30 a barrel in premarket electronic trade.

Prices first touched $65 on Wednesday, before settling at $64.90, a bumpy 2.9 percent rise, and the contract's highest settlement on record.

London Brent also broke new records, trading at over $64 for the first time. The September-delivery contract then eased by 44 cents to $63.55.

"Gasoline inventories are down against last year. We have enough stocks for the winter but not for the summer. Therefore for the time being, prices should be at very expensive levels," said Tetsu Emori at Mitsui Bussan Futures.

The weekly Energy Information Administration report showed on Wednesday a 2.1 million-barrel decline in gasoline stockpiles, sending prices of the motor fuel to a record-high settlement of $1.8963 a gallon, up 4 percent.

"Stocks of finished gasoline have gone from tight to tighter over the past three weeks, drawing from the low of the previous five-year range to, most recently, 6 percent below it. And the refineries just keep breaking down," French Societe Generale said in its weekly comment.

A rash of refinery problems in the United States has contributed to a 1.1 percent fall in refinery utilization at a time U.S. gasoline demand is running at a robust 1.4 percent higher than a year ago in the past four weeks.

The weekly stocks data showed a more bearish 2.8 million-barrel rise in crude oil stocks as imports hit their second-highest level ever, and a 2.6 million-barrel increase in distillates stocks, which include the crucial winter heating fuels.

Middle East tensions

Oil prices have risen in nine of the past 11 sessions as the market has been edgy over possible instability in Saudi Arabia and Iran, OPEC's two-largest oil producers. (Full story.)

Worries about Saudi Arabia receded as U.S. diplomatic missions in the kingdom reopened Wednesday after closing for two days because of a threat of militant attacks.

But fears remained, with Britain warning this week that militants were in the final stages of planning attacks in Saudi Arabia, while Australia said it had received credible reports that extremists were planning strikes in the near future.

On its part, Iran defied demands that it halts all atomic work by breaking U.N. seals at a uranium processing plant Wednesday, making the plant fully operational, and leaving the market jittery about U.S. reactions to this latest move. (Full story.)

BP (up $0.40 to $70.58, Research) compounded worries over supply Wednesday, saying its 120,000 barrel-per-day Schiehallion North Sea oilfield would be down until end-August as it repairs fire damage, against expectations the field would be back on stream more rapidly.

Unplanned closures and scheduled maintenance have cut around 10 percent of North Sea output in August.

Comments: Post a Comment

This page is powered by Blogger. Isn't yours?