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California oil field explosion pushes oil over 60 { January 2007 } Original Source Link: (May no longer be active)
http://www.forbes.com/afxnewslimited/feeds/afx/2007/02/08/afx3411247.htmlhttp://www.forbes.com/afxnewslimited/feeds/afx/2007/02/08/afx3411247.html
AFX News Limited
Oil prices back above 60 usd in Asian trade
02.08.07, 11:20 PM ET
SINGAPORE (XFN-ASIA) - Oil prices rose through strong resistance at 60 usd in Asian trade Friday, extending their sharp gains overnight as cold weather continued in the northeastern US, stoking demand for heating fuel, dealers said.
Speculative buying and the shutdown of a oil field in California after an explosion and fire there also helped drive prices past the 60 usd mark for the first time since Jan 3, they said.
Last month, prices fell below 50 usd to their lowest levels since May 2005, amid warm winter weather in the northern hemisphere and big stockpiles.
At 11.15 am here (0315 GMT), the New York Mercantile Exchange's main oil futures contract, light sweet crude for delivery in March, was up 0.41 usd at 60.12 usd a barrel from 59.71 usd in late trading in the US overnight. Brent North Sea crude for March delivery was up 0.30 usd at 59.33 usd.
Tobin Gorey, a commodities strategist at the Commonwealth Bank of Australia in Sydney, said: 'It's driven by the winter more than anything else ... the weather has been colder for a longer time and demand for heating oil is causing a draw back in inventories.'
He added: 'How long the price will be supported ... will depend on how long the cold is going to last.'
The breaching of the 60 usd level should prompt more buying, Gorey said.
'Sixty dollars is a trigger level for some to buy ... A market position is that above 60 usd, people who are short will be doing a bit more buying while others will be reluctant to sell as well.'
The US is the world's biggest energy consumer, and the rise in demand there for heating fuel while the late winter weather remains unusually cold has been the main cause of the increase in oil prices.
The US National Weather Service is forecasting that temperatures in the northeastern US will be below the average for this time of the year for the next 6-10 days, raising concern this could further reduce stockpiles.
US crude oil reserves fell by 400,000 barrels in the week ended last Friday to 324.5 mln barrels, according to the US Department of Energy's weekly inventory report.
However, US distillate stocks, which include heating oil, tumbled by 3.7 mln barrels to 136.3 mln.
News that Occidental Petroleum (nyse: OXY - news - people ) had shut down its Elk Hills operation in central California, which normally pumps 120,000 barrels of crude per day, also rattled the market, dealers said.
Gorey said oil is expected to trade between 57 usd and 62 usd in the week ahead.
'I think there is a lot of resistance to the early sixties, but it will probably trade up to 62.25 usd and back down to a low of 57.70,' he said.
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