Oil Prices Creep Higher, Test $68 Mark

AP 25aug2005

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Oil prices crept higher to settle at a new high Thursday, taking their cue from a rally in gasoline futures. But analysts said the upward momentum was somewhat bewildering given the easing of concerns about a storm expected to move into the Gulf of Mexico.

Tropical Storm Katrina trudged toward Florida's southeastern coast on Thursday and forecasters expected it to strengthen to a weak hurricane before making landfall overnight. But the U.S. National Hurricane Center said after the storm moves into the Gulf of Mexico, it could turn to the north and eventually strike the state's Panhandle early next week - a path that would keep it away from the heart of the oil and gas producing regions of the Gulf.

"Today was a golden opportunity to sell off," said analyst Phil Flynn at Alaron Trading Corp. in Chicago. "One would think that with Katrina going off in a different direction, the market would too. But it didn't."

On Wednesday, fears that Katrina would disrupt oil and natural gas production in the region was the main catalyst pushing October crude futures on the New York Mercantile Exchange to a record close of $67.32 a barrel.

"The market really went bonkers about this storm, even more than usual," Flynn said. "That tells me this market is looking for excuses to drive higher."

Crude futures gained 17 cents to settle at $67.49 on Thursday, the highest closing price since oil began trading on Nymex in 1983. On an inflation-adjusted basis, oil prices would need to hit about $90 a barrel to match the highs of 25 years ago.

Crude futures briefly touched $68 a barrel in overnight electronic trade, reflecting the market's longstanding jitters about rising demand and the limited amount of excess production capacity around the world. Stoking bullish sentiment was a U.S. supply report that showed a decline in gasoline stocks and China saying its crude imports spiked in July. Traders also eyed a refinery snag in California.

Still, the fear of supply troubles exceeds the actual tightness in the market, traders said.

"From a purely fundamental basis, the market shouldn't be within $20 of the crude price that we're seeing," said oil broker Aaron Kildow of Prudential Financial. "But people are reluctant to sell."

Gasoline futures surged 3.79 cents to $1.9637 a gallon on Nymex, where heating oil rose less than a penny to $1.8695 a gallon.

The International Monetary Fund said Thursday that Asian growth could be derailed by high oil prices, and warned of high inflation in Indonesia and the Philippines.

IMF managing director Rodrigo de Rato warned that high oil prices posed a significant risk to global economic expansion, and said they were not likely to fall in the near term.

He said both Indonesia and the Philippines need to be vigilant to curb the inflationary threat of high oil prices. In Indonesia, oil prices have pulled the local currency to a 41-month low and have slowed economic growth.

The price spike in Asian trading also came after China released data showing that its crude imports rose 15 percent in July from a year earlier. In the first seven months of this year, China's crude oil imports have risen 5.4 percent compared to a year ago.

The United States and China are the world's top two consumers of crude, and China's growing appetite for crude is said to be one of the key reasons for the world's shrinking excess capacity to offset any lost output.

"The market sentiment is not whether crude will one day reach $70, the question is when," said Victor Shum, energy analyst at Texas-based consultants Purvin & Gertz in Singapore. "We are now heading into the fourth quarter, a seasonally higher demand period."

Market focus is now shifting to heating oil and natural gas as demand for these products usually peaks in the winter.

On Wednesday, the U.S. Energy Department said domestic inventories of gasoline fell by 3.2 million barrels last week to 194.9 million barrels, or 7 percent below year-ago levels.

U.S. supplies of crude oil grew by 1.8 million barrels to 322.9 million barrels, or 13 percent above year-ago levels, the agency said. The supply of distillate fuel, which includes heating oil and diesel, increased by 1.4 million barrels to 132.5 million barrels, or 4 percent above last year's level.

Associated Press Writers Brad Foss in Washington and En-Lai Yeoh in Singapore contributed to this report.

NYMEX Oil Holds Above $67 on Hurricane Concerns - Reuters 26aug2005

TOKYO — U.S. crude oil futures eased from a record high but held above $67 on Friday on continuing supply concerns, as Hurricane Katrina led some oil and gas producers in the Gulf of Mexico to evacuate workers.

Forecasters said Katrina would miss the key producing areas in the Gulf of Mexico, which accounts for about a quarter of U.S. oil an gas output. But several operators removed some staff from installations in the area.

NYMEX crude oil for October delivery <CLc1> was down 2 cents at $67.47 a barrel in ACCESS electronic trading. Volume was thin, at 1,312 contracts by 0023 GMT.

On Thursday, the contract settled 17 cents higher at $67.49. It rose to $68 at one point, setting the highest price for prompt crude futures on the New York Mercantile Exchange (NYMEX).

Technical analysts pegged support at $65.30, with resistance at $68.

"The market is taking a break on the news about the hurricane," a trader said, adding however that the weather would continue to give the market strong support.

"We are still in the hurricane season and hurricanes seem quite active this year. So everyone will continue to be sensitive about weather news and any disruptions," the trader said.

Shell Oil said on Thursday it would evacuate 120 non-essential personnel from offshore operations in the eastern Gulf of Mexico on Thursday and Friday, but added there would be no impact on production.

"While most forecast models indicate Katrina will remain east of Shell's Gulf of Mexico operations, we will continue to treat the storm with caution," Shell said.

It shut-in about 460,000 barrels per day of oil from the whole region during Hurricane Dennis in early July.

BP and Total also said they would evacuate non-essential workers from the eastern part of the Gulf, but there was no impact on production.

An unusually active Atlantic hurricane season has produced 11 named storms and could culminate in as many as 21 tropical storms and 11 hurricanes, forecasters said. Storms in the Gulf of Mexico have shut more than 6 million barrels of crude oil production so far this year.

In London, Brent crude <LCOc1> settled 26 cents higher at $66.27 a barrel on Thursday.

NYMEX September gasoline <HUc1> stood 0.22 cents down at $1.9615 a gallon. On Thursday, it settled 3.79 cents higher at $1.9637.

NYMEX September heating oil <HOc1> was 0.12 cent lower at $1.8683 a gallon. Thursday's settlement was 0.41 cent up at $1.8695.

In Ecuador, oil protesters, whose attacks have shut down petroleum exports, struck a deal with energy companies on Thursday under which the firms will invest more in communities where they operate, protest leaders said.

As of Thursday, output in Ecuador, which mostly supplies crude to California, remained at around 80 percent of its usual level.

On the Tokyo Commodity Exchange (TOCOM), January crude <0#JCO:> rose 220 to 41,790 yen per kilolitre (yen/kl). February gasoline <0#JGL:> was 10 yen up at at 57,640 yen/kl.

February kerosene <0#JKE:> was down by 110 yen at 58,970 yen/kl, while February gas oil <0#JGO:> has yet to trade.

source: http://today.reuters.com/business/newsarticle.aspx?type=tnBusinessNews&storyID=nT212658&imageid=2005-08-26T001353Z_01_MIA21D_RTRIDSP_2_WEATHER-KATRINA.jpg&cap=A%20car%20crosses%20a%20bridge%20during%20the%20tropical%20storm%20Katrina%20after%20its%20pass%20by%20Miami,%20August%2025,%202005.%20Katrina%20strengthened%20into%20a%20hurricane%20from%20a%20tropical%20storm%20on%20Thursday%20and%20deluged%20Florida's%20densely%20populated%20southeast%20coast%20with%20rain,%20heightening%20fears%20of%20flooding.%20%20%20REUTERS/Eduardo%20Munoz 25aug2005

Oil hits high of US$68

CRUDE oil prices made another stab at record levels when they touched US$68 a barrel on the New York Mercantile Exchange on Wednesday, before easing to US$67.32.

The new record price was caused by a storm and net sets of statistics.

Tropical storm Katrina blew near the Gulf of Mexico and raised fears that it could threaten refinery facilities on the US coast.

At the same time, a US government energy report, released on Wednesday, showed a decline in that country's gasoline supply.

China, meanwhile, released data yesterday showing its imports of crude oil rose 15% in July from a year earlier.

The timing of these events and data led some industry observers to worry the oil price would soon reach US$70.

source: http://biz.thestar.com.my/news/story.asp?file=/2005/8/26/business/11878755&sec=business 25aug2005