| Oil heads higher in sight of 40 dollars on supply fears Original Source Link: (May no longer be active) http://www.forbes.com/newswire/2004/05/06/rtr1361095.htmlhttp://www.forbes.com/newswire/2004/05/06/rtr1361095.html
UPDATE 1-Oil heads higher, in sight of $40 on supply fears Reuters, 05.06.04, 3:19 AM ET
(updates prices)
SINGAPORE, May 6 (Reuters) - U.S. oil prices stayed near 13-year highs on Thursday, edging up towards $40 a barrel as traders remained wary of a possible sabotage attack on oil facilities in the volatile Middle East, home to two-thirds of global reserves.
Crude found support from a new record for U.S. gasoline futures as worries lingered that stocks are too low to comfortably meet peak summer demand.
U.S. light crude peaked at $39.78 a barrel during the Asian trading day, up 21 cents from Wednesday's 13-year closing high of $39.57 a barrel. London Brent rose eight cents to $36.80 in opening trade. Prices have risen more than six percent this week.
"I think we're going to have a four in front of the oil price very soon. It's certainly pretty ugly for the oil consumers of the world," said David Thurtell, commodities strategist at Commonwealth Bank of Australia in Sydney.
Worries over stable supplies from the Middle East, low stocks of gasoline in the United States and soaring demand in China have driven U.S. crude prices towards the all-time record at $41.15 reached in October 1990 after Iraq invaded Kuwait in the crisis that led to the Gulf War.
Tetsu Emori, chief commodities strategist at Mitsui Bussan Futures in Tokyo, forecast that crude was likely to push up to $43-$45 a barrel by mid-year.
"Last year we hit $39.99 before the war, which was largely psychological. Now we need to look at the fundamentals and they are very strong," Emori said. Prices spiked to that level during intraday trading in February 2003 as U.S.-led forces prepared to attack Iraq.
Traders worry that weekend shootings at a Saudi Arabian petrochemicals plant and attempts a week earlier to bomb Iraq's key Basra oil export terminal might be precursors to a bigger attack on vital oil facilities in the Middle East, which pumps about one-third of global daily crude output.
U.S. gasoline futures also set a new record at $1.3205 a gallon, finding little comfort from fresh data showing that American inventories of motor fuel rose by four million barrels in the week to April 30, more than double expectations of a 1.7-million-barrel rise.
Despite the increase, U.S. gasoline stocks remain 3.3 million barrels under levels at the same time last year and 5.6 million barrels below the five-year average for this time of year.
"Gasoline levels are still below comfortable levels. It only needs a little trouble at one or two refineries during summer and there could be a problem with supplies," said a broker.
U.S. gasoline consumption hits a peak in the summer vacation months between the end of May and September and is used as a barometer for overall demand in the world's biggest oil user.
Copyright 2004, Reuters News Service
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