Platt's says oil hit levels not even seen in Gulf Wargreenspun.com : LUSENET : TB2K spinoff uncensored : One Thread
Wednesday, March 08, 2000 Last updated: 00:47 EST
Oil & Gas News
Platt's says oil prices hit levels not seen even in Gulf War
By KERM YERMAN
Oil prices in Singapore on March 7 surpassed even those levels seen during the 1991 Gulf War crisis, specialist energy news service Platt's said. But in much of the rest of the world, there still is a way to go before the market reaches the highs recorded during the months leading up to the start of the Gulf War, or in the Iranian revolution-inspired price spike of 1979, said Platt's.
High sulfur fuel oil, used in power generation and in ships' engines, was offered for sale in Asia by oil giant Shell at $211 per metric ton, almost $20 higher than the Jan. 16, 1991, price of $192.50 recorded by Platt's. Bids in the Singapore market were at $195, also higher than the war-time record, Platt's said.
"This is unprecedented," said Platt's editorial director of market reporting, Jorge Montepeque. "These numbers have never existed in the open market, even during the Gulf War."
Oil markets in 1991 leaped to emergency highs, as traders feared Iraq's invasion of Kuwait might cut off up to 20% of world oil supplies.
In the U.S., prices on the New York Mercantile Exchange for gasoline and crude oil moved into territory not seen since the pre-Gulf War days. For example, the NY harbor gasoline quotation of Platt's reached $1.20-$1.215 in December 1979, but was indicated Tuesday near 98 cents/gal. However, the highest spot price recorded by Platt's in the runup to the Gulf War was $1.05 on Aug. 24, and it was above $1 several times in mid-October 1990.
On the US Gulf Coast, gasoline prices near 96 cents/gal for Colonial Pipeline gasoline still have not reached the $1 level recorded during the Gulf War runup as late as Sept. 24, 1990; pre-war prices also reached as high as $1.06 on Aug 23, 1990. Either price is still far from the Nov. 7, 1979 price high of $1.225.
In the Mediterranean, ship fuel prices (known as "bunkers") hit levels March 7 that were double those seen as recently as last summer, Platt's said.
Futures prices on London's International Petroleum Exchange jumped by almost a dollar and a half, meanwhile, adding to fears that consumer gasoline prices will continue to spiral upwards.
Mixed signals from the OPEC producers' cartel continue to underpin oil traders' belief that a massive supply-demand gap in the oil market will not be bridged any time soon. In particular, vocal opposition from price-hawk Iran to increasing OPEC production any time soon has prompted doubts the cartel will succumb to western pressure to calm the price rise.
"Even if OPEC decides to increase production by a million barrels a day at its meeting later this month, that isn't going to close the gap and bring prices down substantially," said Platt's editorial vice-president Neil Fleming. "A rebound in Asian oil demand has coincided with OPEC's output squeeze to create a net shortfall in world oil production of at least 2-million barrels a day," he said.
The 11-member OPEC cartel has progressively curbed its production by 4.316-million barrels a day since March 1988, theoretically taking nearly 6% of world oil production off the market. Only a part of that has been compensated for by increased output elsewhere.
-- - (firstname.lastname@example.org), March 08, 2000