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Oil hits 13 year high amid low inventories { April 28 2004 } Original Source Link: (May no longer be active)
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Oil hits 13-year high amid low US inventories
By Deborah Hargreaves and Neil Dennis
Published: April 28 2004 11:41 | Last Updated: April 28 2004 11:41
Crude oil prices rose sharply on Wednesday to their highest level in 13 years following surprisingly low inventory figures from the US.
North Sea Brent crude futures were 50 cents higher at $34.76 a barrel in late afternoon trading - the highest point since the price broke through $35 at the time of the first Gulf war - before falling back to settle 3 cents higher on the day at $34.31.
Nymex crude futures rose 45 cents at $37.98 on the news before closing 7 cents lower on the day at $37.46.
Gasoline futures also reached another all-time high as the US Energy Information Administration reported a 5.5 per cent fall in reformulated petrol or green gasoline inventories.
Low US fuel inventories, rising Chinese demand and tension in the Middle East have combined to push oil prices higher. The US figures showed a fall in inventories of 1.4m barrels against expectations by analysts that stocks would be steady.
Also, comments by Alan Greenspan, Federal Reserve chairman, on Tuesday night about future oil prices and consumption in the US continued to have an impact.
Intense fighting in Iraq spurred fresh concern about sabotage hitting supplies from the country. Furthermore, a battle between police and gunmen followed an explosion near the diplomatic centre of Damascus, the Syrian capital.
Mr Greenspan, commenting on future demand in the US, said that expected long-term high oil prices would be likely to prove the norm and would affect the growth of future oil and gas consumption. He said this could affect significantly the long-term path of the US economy.
Gold suffered a sell-off while market participants awaited fresh data from the US to help provide direction. The yellow metal fell from an opening price of $397 a troy ounce to $386.
"Dollar watching remains the theme for short-term players as gold was again confined to a relatively tight and orderly range," said James Moore at the Bullion Desk.
"Overall, the market seems to have built a pretty solid base around $390 with the backdrop of geopolitical tensions and violence in Iraq helping to draw fresh interest into the market as investors seek to diversify their speculative risk," Mr Moore said.
With first-quarter gross domestic product data to be released in the US tomorrow, few expected precious metals prices to move considerably.
"We still see it likely that prices will push back above $400," said Kamal Naqvi, precious metals analyst at Barclays Capital. "However, we still believe that such a move would be seen as an opportunity for remaining speculative longs to exit positions rather than being a genuine wave higher again."
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