Crude Oil Jumps to Another 10-Year High Againgreenspun.com : LUSENET : TB2K spinoff uncensored : One Thread
09/15 16:27 Crude Oil Jumps on Persian Gulf Tension, Tropical Storm Threat
By Mark Shenk
New York, Sept. 15 (Bloomberg) -- Crude oil rose more than 5 percent, reaching a 10-year high for the second time this week, on tensions in the Persian Gulf and concern that a storm will intensify as it moves toward U.S. rigs and refineries along the Gulf of Mexico.
Iraq has accused Kuwait of pumping oil from a field that Iraq claims as its own. Kuwait disputes the charge. Tensions in the region, and the possibility that U.S. crude oil production and refining could be disrupted by a storm, come with inventories 6.8 percent below year-ago levels.
``We have Kuwait and Iraq pointing fingers at each other,'' said Al Zappulla, a trader at ABN Amro Inc. in New York. ``We are very susceptible to any news from that region right now. It's the only place we can get additional oil from.''
Crude oil for October delivery rose $1.85, or 5.4 percent, to $35.92 a barrel on the New York Mercantile Exchange. Prices rose as high as $36 for the first time since October 1990, after Iraq invaded Kuwait and touched off the Persian Gulf War. Oil rose $2.29, or 6.8 percent, this week.
In London, Brent crude oil for November settlement rose $1.69, or 5.2 percent, to close at $33.98 a barrel on the International Petroleum Exchange.
Today's price rally accelerated after U.S. President Bill Clinton said he didn't think the nation faces a recession because of high energy prices. His remarks sparked concern that the government wouldn't soon sell oil from national reserves to ease tight supplies, as had been expected earlier this week.
White House spokesman Joe Lockhart said the administration hadn't ruled out tapping the nation's emergency stockpile.
Iraq said Kuwait had been drilling in the border zone between the two countries to draw oil from Iraqi reserves. Kuwait said the oil was theirs and that Iraqi planes flew close to the Kuwaiti and Saudi Arabian borders, violating a no-fly zone. U.S. Secretary of State Madeleine Albright warned of an ``appropriate'' response if Iraq attacks or threatens its neighbors.
The U.S. and U.K. have enforced a ban on Iraqi military flights in northern and southern areas of the country following the 1990-91 Persian Gulf War, in which the U.S. and its allies repelled the Iraqi invasion of Kuwait.
The Organization of Petroleum Exporting Countries agreed last Sunday to its third output increase since March, a boost of 800,000 barrels, or 3.2 percent, to daily quotas. Oil this year has jumped 43 percent. Most of OPEC's extra capacity is held by Saudi Arabia, the world's top producer. About a third of the world's oil comes from the Persian Gulf region.
Kuwait is a party to the quota increase, while Iraq's exports have been controlled by the United Nations since 1990.
The National Weather Service said the tropical system was moving into the Gulf from Mexico's Yucatan Peninsula and could strengthen into a tropical storm over the next few days. Private forecasters said high-altitude winds will probably keep the storm from getting too strong.
``The system will never develop into a hurricane,'' said Michael Palmerino, senior meteorologist at Weather Services Corp. in Lexington, Massachusetts. ``There is no history this season of this type of system developing, because of a strong westerly wind shear.''
In past seasons, hurricanes have forced the closure and evacuation of production rigs off the coasts of Louisiana and Texas. They also have forced refineries to shut down because of flooding or loss of power.
Joint Oil Policy
Following OPEC's failure to drive down oil prices with its latest production quota increase, the world's biggest industrial nations are considering a joint policy on oil prices and foreign exchange rates, the Financial Times said.
Britain said it would use a Group of Seven meeting in Prague later this month to put pressure on OPEC to raise output further.
In the U.K., oil companies continued stepped-up deliveries to gasoline stations, after a nationwide protest left most of the country without fuel. BP Amoco Plc, the largest oil producer in the U.K., said motorists will have ``reliable'' service by tomorrow.
Cheaper U.S. gasoline caused consumer prices to fall in August for the first time in more than 14 years, according to the Labor Department, though a rebound at the pump this month may reverse the decline, analysts said. Energy prices account for about a 10th of the consumer price index. ) Copyright 2000, Bloomberg L.P. All Rights Reserved.
-- (M@rket.trends), September 16, 2000
CPR, advice for next week please?
-- Investor (INV@whazzup.con), September 16, 2000.