NYMEX crude marches on above $35 despite Saudi pledge

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Thursday September 7, 2:37 pm Eastern Time

NYMEX crude marches on above $35 despite Saudi pledge

NEW YORK, Sept 7 (Reuters) - NYMEX crude oil futures set fresh 10-year highs in afternoon trade Thursday despite a Saudi pledge for a 700,000 barrel per day (bpd) OPEC output increase when the cartel meets on Sunday.

October crude tested resistance at $35.19, the overnight high, and broke through, hitting fresh post-Gulf War highs, the most recent at $35.39.

At 2:30 p.m. (1830 GMT), the contract traded at $35.35, a gain of 45 cents.

October heating oil surged to fresh Gulf War highs, the last at $1.0295 a gallon, stretching the day's gains to 3.24 cents. It earlier surpassed the August 29 high of $1.015, which until today had been the highest mark since the 1990-91 Iraqi invasion of Kuwait and the Gulf War.

Heating oil's strength continued to be supported by the inventory data from last week. The U.S. Energy Information Administration (EIA) said U.S. heating oil stocks are down 37 percent from a year ago.

Gasoline futures were also on the march, which along with heating oil stocks, face further tigthening of stocks in view of a heavy maintenance turnaround for refineries this fall.

October gasoline struck a fresh contract high of $1.0095 a gallon, gaining 1.10 cents and setting a week-high. It later eased to $1.0065, up 0.85 cent.

An early morning fire shut Sunoco Inc.'s (NYSE:SUN - news) 130,000 bpd crude unit in Philadelphia. The fire was tapped out before noon and a spokesman did not know when the unit would restart.

In London, October Brent crude stabilised above $34 and was trading up 21 cents at $34.49 a barrel, after sinking earlier in the day to $33.46 earlier.

Oil prices fell earlier in the day on both sides of the Atlantic on news that Saudi Arabia expected an output increase of about 700,000 bpd at OPEC's meeting in Vienna.

Saudi Crown Prince Abdullah gave the message to President Bill Clinton during talks at a hotel in New York during a break in the U.N. Millennium Summit on Wednesday, according to a source close to the talks between Clinton and the prince.

Clinton said Thursday he told Abdullah that oil prices were too high and OPEC shoudl take appropriate action on the issue.

U.S. oil traders and analysts say 700,000 bpd increase, if adopted, would still not be enough to calm down the overheated markets, with some suggesting the increase should be no less than one million barrels.

The market had been expecting OPEC to invoke its price-band mechanism at its meeting on Sunday to increase the cartel's output by 500,000 bpd.

The mechanism calls for raising output by that volume when the price of a basket of crude exceeds $28 a barrel for 20 consecutive working days, which it is expected to reach by Friday.



-- Cave Man (caves@are.us), September 07, 2000


OPEC's Actions Irrelevant: Weak U.S. Infrastructure Can't Handle Increased Oil Production Claims Int'l Oil Experts Source: PRNewswire PRESS RELEASE Publication date: 2000-09-07

(Saudi's 'Excess Capacity' Pumps Have Run Dry,

Making Commitment Unobtainable)

HOUSTON, Sept. 7 /PRNewswire/ -- OPEC's upcoming meeting is a moot point claims Ronald Oligney and Michael Economides, both University of Houston professors, Fortune 500 consultants and founders of OTEK (Australia), a petroleum service and consulting firm with offices throughout Australia. According to Oligney and Economides, who accurately predicted our current "mini-oil crisis" over a year ago, the real problem is that the whole infrastructure is weak due to a lack of investment dollars.

The two cite a recent Merrill Lynch announcement as evidence that another of their predictions has come true. "In March of this year, the Saudi government claimed they had 7 1/2 million barrels a day in excess capacity," says Oligney. "We insisted that was off by at least 5 million barrels and just last week, Merrill Lynch said that based on new market research, the firm had to downgrade excess capacity for OPEC."

But even if OPEC had the excess capacity, these experts state that there are serious infrastructure flaws, such as the lack of tankerage to move the oil, that will prohibit any consumer relief in the near future. Their view is that the financial community and its lack of investment in the industry are largely to blame. In fact, Oligney and Economides feel that larger investment firms as a whole may be guilty of wanton advice that borders on questionable professional behavior.

These issues and more are planned for discussion during their scheduled CNN "In The Money" interview Monday, September 11th, 2000 at 11am EST. Other questions to be answered are:

Will the Saudi government come through on their promise to increase oil production and how? How much supply will OPEC approve? Does OPEC's actions make a difference?

Together, these University of Houston professors have written a book, The Color of Oil, subtitled "The History, Money and Politics Behind the World's Biggest Business." In it, readers will find more provocative views and predictions in an easy to read format. SOURCE OTEK

Publication date: 2000-09-07

http://cnniw.yellowbrix.com/pages/cnniw/Story.nsp?story_id=13548347&ID =cnniw&scategory=Energy

-- Cave Man (caves@are.us), September 07, 2000.

Yup, more words. Gee, didn't we hear this stuff recently?

"Saudi pledge"

"heating oil stocks are down 37 percent from a year ago"

"700,000 bpd increase, if adopted, would still not be enough"

"OPEC's upcoming meeting is a moot point"

"Merrill Lynch said that based on new market research, the firm had to downgrade excess capacity for OPEC"

"Does OPEC's actions make a difference?"

And I really like this one, from the story that follows: "His [Clinton] comments came hours before crude oil futures hit a 10-year high on the New York Mercantile Exchange."



Hummm, how do you spell that:


Any remarks, cpr, on oil futures? Sounds like Sergeant Friday made it on his futures. How did you do, cpr, considering that the price of crude has TRIPLED in the last 7 quarters! Or maybe you should take up a new cause, the tax cut, being the liberal that you are (V.B.G.)...

Clinton Calls Oil a Recession Risk

NEW YORK (AP) - President Clinton said Thursday he fears the high cost of oil could lead to a recession in the roaring U.S. economy or elsewhere in the world, and said he has asked the Saudis to help lower crude prices.

Clinton met with Saudi Arabia's Crown Prince Abdullah on the fringes of the U.N. Millennium Summit.

``I told him I was very concerned that the price of oil is too high, not just for America but for the world,'' Clinton said before beginning another session with a world leader - this one with South Korean President Kim Dae-jung.

Clinton said he told Abdullah ``that if it was to cause a recession in any part of the world that would hurt the oil-producing countries.''

``There were other reasons why it's not in our interest, and he agreed with that, he's been very strong about that,'' Clinton said, adding that he hopes the Organization of Petroleum Exporting Countries will take ``appropriate action,'' to lower prices.

National Security Council spokesman P.J. Crowley declined to characterize the crown prince's response to Clinton. ``We believe the Saudis understand there's a balance of interests here between producing countries and consuming countries,'' Crowley said. ``But as to what, how the Saudis plan to approach the OPEC meeting this weekend, I think it's for the Saudis to characterize their position.''

Oil prices have more than tripled since hitting a 12-year low of less than $11 a barrel in December 1998, before OPEC slashed production to force prices higher.

Abdullah said earlier this week that his oil-rich country is working to stabilize world oil prices but consumer countries must contribute to this effort by reducing fuel taxes.

His comments came hours before crude oil futures hit a 10-year high on the New York Mercantile Exchange.

Speaking to American businessmen Tuesday night, Abdullah also said his country is moving forward on an economic reform program designed to lure foreign investment and lessen the country's reliance on its main source of income: revenues from oil sales.

``Saudi Arabia will continue to make every effort to ensure equilibrium in the oil markets and to stabilize prices,'' said Abdullah, whose country is the world's top exporter of oil. ``This requires the cooperation of all producing countries, whether they are members or nonmembers of OPEC.''

But, Abdullah said, taxation by oil-consuming countries also puts pressure on prices. ``These taxes, which bear heavily on consumers, should be reconsidered,'' he said.

Last month, Saudi Arabia said it would work with other OPEC members to increase output to stabilize oil prices, which have topped $30 per barrel. Market experts say the 500,000 barrels a day of additional production that OPEC is expected to approve at its meeting in Vienna this weekend is not enough to meet heavy world demand.

On Wednesday in London, prices of Brent crude for delivery in October hit a 10-year high of $33.50 a barrel. On the New York Mercantile Exchange, oil for delivery in October surpassed the previous 10-year high of $34.37, reaching $34.45 before declining to $34.31.


-- Sysman (y2kboard@yahoo.com), September 07, 2000.


And before you ask me again, cpr, what my point is...

You are, and have been, WRONG about the expected price of oil. Just like I was WRONG about the expected impact of Y2K.

But the difference is that I have ADMITTED that I was wrong. You, on the other hand, never have, and never will (in my opinion) admit that you are wrong about anything.

After all, you are the great cpr...


-- Sysman (y2kboard@yahoo.com), September 08, 2000.

How could Creeper have been soooooo WRONG???

-- (he must @ be a. fool), September 08, 2000.

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