Associated Press
Oil Tops $52 a Barrel on Nigeria Worries
Wednesday October 6, 10:42 pm ET
By Brad Foss, AP Business Writer
Crude Oil Futures Surge Past $52 a Barrel on Nigeria Worries, Gulf of Mexico Output
WASHINGTON (AP) -- Crude futures surged above $52 a barrel Wednesday as a possible strike by Nigerian oil workers loomed and petroleum output in the Gulf of Mexico continued to suffer more than two weeks after Hurricane Ivan whipped through the region.
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Oil producers in the Gulf say a significant obstacle is that some pipelines in the region are still shut down while damage is inspected and fixed.
An Energy Department report that showed domestic oil supplies grew for the second week in a row provided little comfort to traders, who instead focused on declining heating oil inventories.
The federal agency warned in a separate report Wednesday that homeowners should expect their heating bills to rise this winter due to double-digit price increases for heating oil and natural gas.
Light crude for November delivery rose 93 cents to $52.02 a barrel on the New York Mercantile Exchange, a record settlement high. In London, November Brent crude futures were up 86 cents at $47.99 per barrel on the International Petroleum Exchange. In Asian trading Thursday, crude oil reached a fresh all-time high, hitting $52.23 per barrel.
While oil prices are 64 percent higher than a year ago, when adjusted for inflation, they remain about $28 below the peak reached in 1981.
Still, the runup has been a boon to the stock prices of oil companies.
Shares of Exxon Mobil Corp., the largest integrated petroleum company, are up more than 30 percent from a year ago, rising 71 cents Wednesday to $50.03 on the New York Stock Exchange. The stock price of Anadarko Petroleum Corp., an independent oil and natural gas producer, is up more than 60 percent from a year ago at $69.33, rising $1.21 Wednesday on the NYSE.
Feeding oil's rise on Wednesday, Nigeria's main oil workers' union said it would join a national strike, set to begin next week, unless the government agreed to talks on rising fuel prices. Nigeria, which produces more than 2 million barrels of crude daily, is the world's seventh-largest oil exporter.
Hours later, the Energy Department reported that commercially available inventories of crude grew by 1.1 million barrels to 274 million barrels. That follows an increase of 3.4 million barrels in the prior week, but still leaves inventories 4 percent below year ago levels, a shortfall that has traders worried as global supplies remain tight and colder months approach.
"Unfortunately, the build in supplies doesn't appear to be enough to break the back of $50 oil," said John Kilduff, senior oil analyst at Fimat USA in New York.
Moreover, the country's supply of distillate fuel, which includes heating oil, diesel and jet fuel, shrank by 2.1 million barrels last week to 123.4 million barrels, according to the government report. That's 6 percent below year ago levels and comes as the United States and the rest of the Northern Hemisphere prepare for winter, when demand rises for home heating fuels such as natural gas and heating oil, a crude derivative.
"The drawdown in distillate appears to be the focus of the market," Kilduff said.
Heating oil is priced more than 70 percent above year ago levels, with November futures trading at $1.4200 per gallon Wednesday, up 1.41 cent on Nymex. Natural gas is 42 percent more expensive than last year, with November futures trading at $7.045 per 1,000 cubic feet, down 11.9 cents.
The retail price of gasoline has also remained stubbornly high, averaging $1.94 per gallon nationwide -- a 36.5-cent increase from a year ago. November gasoline futures traded at $1.3875 per gallon Wednesday, up 2.09 cents.
The tension underlying oil markets in recent weeks has been pinned on longer-than-expected production snags in the Gulf of Mexico, where oil companies are still regrouping in the wake of Hurricane Ivan.
Crude production in the region is 478,000 barrels per day below normal and oil output is down by more than 16 million barrels since Sept. 13, the federal Minerals Management Service said Wednesday. More than 70 billion cubic feet of natural gas output has been lost in the same period, and daily output remains 1.8 billion cubic feet below normal, the agency said.
BP PLC spokesman Hugh Deplend said the company is only producing about 40 percent of its usual 350,000 barrels per day of oil equivalent in the region. "Most of our facilities are ready to produce, but we're somewhat at the mercy of the pipelines, which are not yet ready to receive the oil," he said.
A major worry among analysts in the United States and abroad is the world's limited excess oil-production capacity, or supply buffer, which is hovering around 1 percent above robust global consumption of 82 million barrels per day. As a result, fears of supply disruptions in Russia, Venezuela and Nigeria have pushed prices higher for several months.
Sporadic attacks against oil pipelines in Iraq have also caused oil prices to jump.
Friedman, Billings, Ramsey & Co. oil analyst Jacques Rousseau said in a report Wednesday that "the combination of strong demand, limited spare production capacity, and a weak dollar should keep crude oil prices well above historic levels" and he raised his average price estimate in 2005 to $39 a barrel, up from $30 a barrel.
Greetz
Oil Tops $52 a Barrel on Nigeria Worries
Wednesday October 6, 10:42 pm ET
By Brad Foss, AP Business Writer
Crude Oil Futures Surge Past $52 a Barrel on Nigeria Worries, Gulf of Mexico Output
WASHINGTON (AP) -- Crude futures surged above $52 a barrel Wednesday as a possible strike by Nigerian oil workers loomed and petroleum output in the Gulf of Mexico continued to suffer more than two weeks after Hurricane Ivan whipped through the region.
ADVERTISEMENT
Oil producers in the Gulf say a significant obstacle is that some pipelines in the region are still shut down while damage is inspected and fixed.
An Energy Department report that showed domestic oil supplies grew for the second week in a row provided little comfort to traders, who instead focused on declining heating oil inventories.
The federal agency warned in a separate report Wednesday that homeowners should expect their heating bills to rise this winter due to double-digit price increases for heating oil and natural gas.
Light crude for November delivery rose 93 cents to $52.02 a barrel on the New York Mercantile Exchange, a record settlement high. In London, November Brent crude futures were up 86 cents at $47.99 per barrel on the International Petroleum Exchange. In Asian trading Thursday, crude oil reached a fresh all-time high, hitting $52.23 per barrel.
While oil prices are 64 percent higher than a year ago, when adjusted for inflation, they remain about $28 below the peak reached in 1981.
Still, the runup has been a boon to the stock prices of oil companies.
Shares of Exxon Mobil Corp., the largest integrated petroleum company, are up more than 30 percent from a year ago, rising 71 cents Wednesday to $50.03 on the New York Stock Exchange. The stock price of Anadarko Petroleum Corp., an independent oil and natural gas producer, is up more than 60 percent from a year ago at $69.33, rising $1.21 Wednesday on the NYSE.
Feeding oil's rise on Wednesday, Nigeria's main oil workers' union said it would join a national strike, set to begin next week, unless the government agreed to talks on rising fuel prices. Nigeria, which produces more than 2 million barrels of crude daily, is the world's seventh-largest oil exporter.
Hours later, the Energy Department reported that commercially available inventories of crude grew by 1.1 million barrels to 274 million barrels. That follows an increase of 3.4 million barrels in the prior week, but still leaves inventories 4 percent below year ago levels, a shortfall that has traders worried as global supplies remain tight and colder months approach.
"Unfortunately, the build in supplies doesn't appear to be enough to break the back of $50 oil," said John Kilduff, senior oil analyst at Fimat USA in New York.
Moreover, the country's supply of distillate fuel, which includes heating oil, diesel and jet fuel, shrank by 2.1 million barrels last week to 123.4 million barrels, according to the government report. That's 6 percent below year ago levels and comes as the United States and the rest of the Northern Hemisphere prepare for winter, when demand rises for home heating fuels such as natural gas and heating oil, a crude derivative.
"The drawdown in distillate appears to be the focus of the market," Kilduff said.
Heating oil is priced more than 70 percent above year ago levels, with November futures trading at $1.4200 per gallon Wednesday, up 1.41 cent on Nymex. Natural gas is 42 percent more expensive than last year, with November futures trading at $7.045 per 1,000 cubic feet, down 11.9 cents.
The retail price of gasoline has also remained stubbornly high, averaging $1.94 per gallon nationwide -- a 36.5-cent increase from a year ago. November gasoline futures traded at $1.3875 per gallon Wednesday, up 2.09 cents.
The tension underlying oil markets in recent weeks has been pinned on longer-than-expected production snags in the Gulf of Mexico, where oil companies are still regrouping in the wake of Hurricane Ivan.
Crude production in the region is 478,000 barrels per day below normal and oil output is down by more than 16 million barrels since Sept. 13, the federal Minerals Management Service said Wednesday. More than 70 billion cubic feet of natural gas output has been lost in the same period, and daily output remains 1.8 billion cubic feet below normal, the agency said.
BP PLC spokesman Hugh Deplend said the company is only producing about 40 percent of its usual 350,000 barrels per day of oil equivalent in the region. "Most of our facilities are ready to produce, but we're somewhat at the mercy of the pipelines, which are not yet ready to receive the oil," he said.
A major worry among analysts in the United States and abroad is the world's limited excess oil-production capacity, or supply buffer, which is hovering around 1 percent above robust global consumption of 82 million barrels per day. As a result, fears of supply disruptions in Russia, Venezuela and Nigeria have pushed prices higher for several months.
Sporadic attacks against oil pipelines in Iraq have also caused oil prices to jump.
Friedman, Billings, Ramsey & Co. oil analyst Jacques Rousseau said in a report Wednesday that "the combination of strong demand, limited spare production capacity, and a weak dollar should keep crude oil prices well above historic levels" and he raised his average price estimate in 2005 to $39 a barrel, up from $30 a barrel.
Greetz
