|
Crude oil rises above 55 on report of heating oil supply drop Original Source Link: (May no longer be active)
http://quote.bloomberg.com/apps/news?pid=10000006&sid=aQUrGqmQa1VU&refer=homehttp://quote.bloomberg.com/apps/news?pid=10000006&sid=aQUrGqmQa1VU&refer=home
Crude Oil Rises Above $55 on Report of Heating Oil Supply Drop
Oct. 20 (Bloomberg) -- Crude oil futures rose to $55.10 a barrel after an Energy Department report showed that U.S. inventories of heating oil fell for a third week.
Stockpiles of the fuel declined 515,000 barrels, or 1 percent, to 49.5 million barrels, leaving supplies 11 percent lower than a year earlier. Crude oil inventories rose 1.2 million barrels to 279.4 million in the week ended Oct. 15. Analysts surveyed by Bloomberg expected a rise of 1.8 million barrels, according to the median of forecasts.
``It's just about too late to build heating oil supplies because peak demand is just around the corner,'' said Jason Schenker, an economist at Wachovia Corp. in Charlotte. ``Supplies will be tight going into winter and heating oil will continue to push up crude oil.''
Crude oil for November delivery rose $1.46, or 2.7 percent, to $54.75 a barrel at 1:16 p.m. on the New York Mercantile Exchange. Oil reached $55.33 on Oct. 18, the highest since trading began in 1983. Prices were 80 percent higher than a year earlier. The November contract expires today. The more active December futures contract rose $1.48, 2.8 percent, to $54.12.
In London, the December Brent crude-oil futures contract rose $1.56, or 3.2 percent, to $50.33 a barrel on the International Petroleum Exchange. Brent futures reached $51.50 on Oct. 12, the highest price since the contract began trading in 1988.
$35 Oil
``I don't think I'll ever see $35 oil again,'' said Boone Pickens, who oversees more than $1 billion in energy-related hedge funds in Dallas, in an interview. In May Pickens predicted oil would climb to $50. ``The fundamentals are getting progressively more favorable to a higher price.''
Supplies of distillate fuel, which include heating oil and diesel, fell 1.9 million barrels, or 1.6 percent, to 119 million, the lowest since the week ended July 16. Analysts surveyed by Bloomberg expected a decline of 1 million barrels, according to the median of forecasts.
``We got in this position because during the summer there was little incentive to make heating oil. The profit margin for heating oil was a couple of dollars while that for gasoline was about $20,'' Schenker said. ``There is just no incentive to build supplies out of season.''
Record Heating Oil
Heating oil for November delivery rose 4.45 cents, or 3 percent, to $1.553 a gallon in New York. Prices reached $1.565, the highest since the fuel began trading in 1978. Gasoline for November delivery rose 4.27 cents, or 3.2 percent, to $1.40 a gallon.
``Heating oil today is at the highest it's ever been,'' Pickens said. ``German tanks are 60 percent filled so we had cargos in the U.S. last week going to Germany.''
The average U.S. retail heating-oil price rose to a record $1.988 a gallon for the week ended Oct. 18, the Energy Department said. Prices advanced 8 cents from the previous week and were 60.5 cents, or 44 percent, more than a year earlier. It is the highest price since the government began conducting the weekly survey of fuel retailers in October 1990.
Prices have surged 28 percent since Sept. 10, the last day before oil companies began to evacuate workers from platforms in the Gulf of Mexico because of Hurricane Ivan. Those companies may need as long as six months to recover from damage caused by Ivan, the U.S. Minerals Management Service said on Oct. 8.
Oil output in the region has been reduced by 22.1 million barrels since Sept. 11 because of the hurricane, the service, part of the Interior Department, said yesterday.
Refineries operated at 88.2 percent of capacity, up 1.3 percentage points, the report showed. Refiners utilized 92.1 percent of their capacity a year earlier.
Hurricane Ivan's Legacy
``We are still dealing with the legacy of Hurricane Ivan,'' said John Kilduff, senior vice president of energy risk management at Fimat USA Inc. in New York. ``With profit margins at this level refiners have every incentive to run full out, yet they are running below 90 percent.''
The margin from processing oil into heating oil and gasoline, based on futures contracts, was $6.356 a barrel, 20 percent higher than a year ago.
Members of the Organization of Petroleum Exporting Countries are concerned that near-record crude oil prices are beginning to hurt world economic growth, said the presidential adviser on oil for Nigeria, the group's sixth-largest producer.
An oil price of higher than $55 a barrel will slow growth, Edmund Daukoru, who advises Nigerian President Olusegun Obasanjo, said in a telephone interview from Abuja, the capital.
``Many months back there were some opinions that the level of crude price that would begin to affect global economic growth in a significant way would be somewhere in the upper 50s,'' Daukoru said. ``That ceiling seems to be coming through. Producing countries I know are getting a little nervous that these are very high price levels.''
OPEC, which pumps more than a third of the world's oil, produced in excess of 30 million barrels a day in September for the first time since 1979, according to data compiled by Bloomberg.
|
|
