Oil prices at 10 year high

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Tuesday, 15 August, 2000, 09:56 GMT 10:56 UK Oil prices at 10-year high

Oil prices have climbed to a 10-year high on Tuesday after comments by Venezuela's President Hugo Chavez who said producers should not allow prices to fall below current levels.

Venezuela is one of the world's leading oil producers and its energy minister is currently president of the Organisation of Petroleum Exporting Countries (Opec).

The price for one barrel of benchmark Brent crude oil, for delivery in September, rose to $32.28 a barrel.

This is the highest price since November 1990, when the Gulf war sent prices spiralling upwards, and tops a peak of $31.95 reached on 7 March this year. In January 1999, a barrel of Brent crude traded for as little as $10.

Besides Mr Chavez' comments, the market was also shocked by data from the United States, showing that the country's stocks of crude oil are at their lowest for 24 years.

Death sentence

Mr Chavez, who was in Nigeria on Monday as part of a tour of Opec members, had said the cartel should resist outside demands for lower prices.

Mr Chavez said he wanted a price "not high but fair" but said any fall from present levels could be a "death sentence" for producers such as Venezuela.

Opec officials had previously said they wanted prices to remain within a $22-28 a barrel range and would boost or cut supplies to help the price stay within this range.

However, managing the market to such a fine degree is proving to be difficult.

But any production increase would take several weeks to be felt in the consumer countries, analysts say.

Saudi's quiet approach

The world's leading oil producer and exporter, Saudi Arabia, has appeared to be in favour of increasing output to help soften prices.

But it has preferred a quiet approach, lifting production only gradually and saying little publicly.

Venezuela has adopted a more confrontational stance and has denied that prices are too high, despite in the past regularly flouting its Opec production quotas and thereby driving down prices.

US criticism

Mr Chavez, who attracted criticism from the US for meeting Iraqi President Saddam Hussein last week, on Tuesday concluded his tour of Opec states with a visit to Algeria.

The purpose of the 10-nation trip had been to issue invitations to an Opec heads-of-state summit in the Venezuelan capital Caracas in late September.

Analysts have speculated that Saudi Arabia has kept quiet about its oil policy partly because of internal disagreements and partly because it does not want to be seen as out of step with its Opec partners in the run-up to a summit designed to promote unity


-- Cave Man (caves@are.us), August 15, 2000


Rpt: U.S. Heating Bills Reportedly Could Rise Up to 50 Pct This Winter AFX News Limited

August 14, 2000

LONDON (AFX) - U.S. heating bills could rise up to 50 pct this winter, the Wall Street Journal reported in its online edition, citing the U.S. Department of Energy and various regional power companies.

Higher natural gas prices could boost heating bills by more than 50 pct as a result of a precarious supply situation, rising consumption and several years of lacklustre North American production, it said.

The U.S. Department of Energy is predicting that this could be the most expensive winter for heating bills in 15 years for natural gas users.

Utilities are sending warnings to customers that natural gas prices have doubled since last year, forcing rate boosts, and in both Chicago and Boston, power companies say gas bills this winter should run 40 pct higher than last year, the newspaper said.

"Our expectation is for continued high prices," said Dave Costello, an economist at the DOE's Energy Information Administration. "And we could see some pretty severe price spikes."

Barring a miracle boost in available production, only a warm winter could save consumers from higher prices this winter, he added.

The widening role of natural gas in power generation is compounding the problem as supply becomes scarcer, the newspaper said.

For example, natural gas production in the shallow waters off the Gulf of Mexico is declining by as much as 40 pct. In the deep water, technological challenges mean increased production could be as long as five years off, it added.

Similarly, oil companies claim that increasingly depleted wells have forced them to drill harder and deeper to get the same level of production. They also complain of a shortage of promising drilling areas in North America, unreliable equipment and a shortage of skilled rig workers.

Prices are also seen rising as heating oil, a further energy source, is often imported during cold snaps, mostly from Europe, it noted.

Germany, a key swing supplier, has been reluctant to build stocks now because of a strong U.S. dollar and the disincentives presented by high crude prices, it said. http://denver.petroleumplace.com/egatecom/scream/./2000/08/14/AEF/2886 -0687-ECO.CRU.PRD.USA.GBR.OIL..html

-- Cave Man (caves@are.us), August 15, 2000.

Just FYI, from the Long Waves forum:

peter beutel and the oil crunch

15 August 2000

there was an excellent interview on bloomberg this morning with oil analyst peter beutel. he made many interesting points but the most salient may have been his comment that the increased saudi production is nowhere to be found.

he also mentioned that a hurricane in the gulf could be much more important now than at other times because of the alarming shortage of stocks. he even talked seriously about the u.s. running out of heating oil this winter.

it seems that both political parties want to keep this quiet before the election for different reasons: the republicans don't want to highlight the bush/cheney ties to big oil and the democrats surely don't want a carteresque oil crisis on their watch and thus the public at large has no real sense of the knife's edge we are on in this matter.

-- Cash (cash@andcarry.com), August 15, 2000.

in the meantime--everywhere--you look=happy-faces! remember tha happy-dinosaurs?-eating & fartin-eating & fartin! when suddenly.........

-- al-d. (dogs@zianet.com), August 15, 2000.

In August, my Conoco stock has gone from 22 to 23 3/4. Ring-a-ding- ding!

-- Lars (lars@indy.net), August 15, 2000.

Oil Futures Rally Past $32 a Barrel

8/17/2000 3:32PM ET

NEW YORK -(Dow Jones)- Crude-oil and petroleum-product futures continued to rally Thursday, tracking sharply higher prices on London's petroleum exchange.

Entering the final hour of floor trading at the New York Mercantile Exchange, September crude oil was up 62 cents, or 2%, at $32.42 a barrel. October crude oil was up 77 cents, or 2.5%, at $31.75 a barrel.

http://www.smartmoney.com/smt/bn/on/index.cfm?story=ON-200 00817-000302-1005

-- Cash (cash@andcarry.com), August 17, 2000.

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