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Oil up in july Original Source Link: (May no longer be active)
http://www.reuters.com/newsArticle.jhtml?type=businessNews&storyID=5569000http://www.reuters.com/newsArticle.jhtml?type=businessNews&storyID=5569000
Oil Up More Than $1 for Second Day
Thu Jul 1, 2004 04:19 PM ET
By Bernard Woodall
NEW YORK (Reuters) - Oil prices soared more than $1 for the second straight day on Thursday as funds snapped up heating fuel due to worries of a supply crunch this winter and after Saudi Arabia signaled that prices had come down far enough.
U.S. light crude jumped $1.69 to $38.74 a barrel, on the heels of a near 4 percent rise on Wednesday. London Brent rose $1.57 to $36.07 a barrel.
The renewed price rise has abruptly stemmed a month-long slide that took oil prices down about $6, or 15 percent, from 21-year highs of $42.45 struck June 2.
"The name of the game is yesterday's (Saudi) news, and the strength in the products, both in Europe and in the States. It is more of a gas oil- and heating oil-led market," said a London trader.
Saudi Oil Minister Ali al-Naimi said on Wednesday that prices were now fair and he did not see any reason to change current output levels. The country raised supply to about 9.1 million barrels a day in June, well above its formal OPEC quota, to cool high prices.
Naimi said OPEC would decide at a meeting on July 21 whether to make a planned increase of 500,000 barrels a day in formal quotas from Aug. 1.
OPEC has raised its formal production target to 25.5 million bpd, but is pumping well above that level to meet strong demand in Asia and the United States.
U.S. petroleum stocks figures released Wednesday by the government showed that crude supply had fallen unexpectedly, rekindling supply concerns.
Traders and analysts said fund speculators were piling into European gas oil and U.S. heating oil, amid growing diesel demand and worries over winter fuel supplies, driving values against crude to unseasonably high levels.
"Global demand, not just in the U.S., for diesel fuel and jet fuel has been very supportive," said Katherine Spector, head of energy research at JP Morgan Securities Inc.
U.S. oil refiners have been producing gasoline at a breakneck pace to pad stockpiles for the summer driving season, letting distillate production lag.
Gasoline pump prices in the United States fell for the fifth straight week last week, but may soon rise again if increases on the futures market trickle down.
The U.S. government said the average price for regular gasoline fell 1.6 cents last week to $1.92 a gallon. But U.S. gasoline futures, which reflect wholesale prices, rose 5.85 cents to $1.2256 cents per gallon on Thursday.
U.S. heating oil futures on Thursday gained 5.95 cents to $1.0803 a gallon, the highest end-day price since March 2003, in the week prior to the U.S.-led invasion of Iraq.
While U.S. crude oil and gasoline futures prices are down sharply since last month, heating oil futures prices are actually 1.5 cents higher.
Traditionally, heating oil prices are highest in the winter, when Northern Hemisphere demand is highest. Some analysts said on Thursday that they fear low heating oil supply in the fourth quarter of this year because U.S. refiners are concentrating heavily this summer on gasoline production.
Nigeria's top oil official said on Thursday he wants oil prices to stay in the mid-$30 a barrel area, and believes OPEC producers should beware of releasing too much supply at current prices.
"Between $30 and up to mid-$30s would seem to be a good balance. Beyond the mid-$30s, approaching $40, everybody gets nervous, even OPEC producers," Nigeria's presidential adviser on petroleum, Edmund Daukoru, told Reuters in an interview.
The extra OPEC output has dampened prices by building supplies on international markets, but an unexpected fall in U.S. crude stocks is keeping supply worries bubbling.
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