U.S. oil prices higher as stocks shrinkgreenspun.com : LUSENET : TB2K spinoff uncensored : One Thread
Tuesday October 10, 5:47 pm Eastern Time
U.S. oil blasts higher as stocks shrink
By Gene Ramos
NEW YORK, Oct 10 (Reuters) - U.S. crude oil prices jumped for the third straight day Tuesday, surging late on news that the nation's pre-winter stock levels had taken another dramatic downturn.
Crude oil prices rocketed 68 cents to $33.86 a barrel in after hours ACCESS trade after new figures from the American Petroleum Institute (API) showed that stocks for all main categories of petroleum fell last week -- and especially in crude oil and distillate.
November futures on the New York Mercantile Exchange had already shot up more than $1.30 to $33.18 a barrel in regular hours on worries that violence between the Israelis and Palestinians could grow into a larger conflict and hit the region's crucial oil supplies.
From Friday prices have risen $3, slashing losses suffered when the U.S. government ordered a release of 30 million barrels from the Strategic Petroleum Reserve (SPR) to try and stop a heating oil supply crunch this winter.
Analysts have warned that the SPR release -- which initially cut crude prices some seven dollars from decade-highs near $38 -- has done little to improve availability of heating oil in the key U.S. northeast consumption centre.
Fears deepened after the API figures showed that crude stocks fell some 3.9 million barrels to 284 million in the week ended October 6, while inventories of distillate -- including heating oil -- slid 3.3 million barrels to 113 million.
Heating oil supplies in the Northeast again failed to rise last week to languish at just half last year's levels according to Tuesday's API report, just as an early blast of cold weather has taken U.S. northeast temperatures well below seasonal norms this weeks.
``The entire energy complex is severely constrained in its ability to deliver crude and products, leaving the system extremely vulnerable to potential price spikes and higher price volatility in both crude and products,'' said Goldman Sachs in a report.
In the Middle East, oil traders were concerned that violence between Israelis and Palestinians, which went on its 13th day on Tuesday, could draw Arab oil producing countries into the fray and lead to a disruption of oil supply from the region, the major source of oil for the industrialised West.
On Tuesday, U.S. Defence Secretary William Cohen said the crisis could threaten to suck in other countries if it was not defused quickly.
``There is a danger that if this goes unchecked we could see a much wider conflict with many more nations involved, and that would be devastating for all concerned,'' Cohen told repoters in England.
Late Monday, Saudi Arabia warned that it and other Arab states would not stand idly by if Israeli Prime Minister Ehud Barak acted against Lebanon and Syria.
By Tuesday, however, a source familiar with the kingdom's thinking said Saudi Arabia will not consider the option of holding back oil supplies to the West to protest Israeli use of force in the Middle East.
``This is not even being talked about. It is not being considered. It is out of the question,'' the source told Reuters, adding that it was no longer politically and economically viable for the kingdom or other Arab petroleum producers to impose an embargo on oil sales.
In the share markets, Big Oil shares posted hefty gains between $1 and $2 amid rising oil prices.
Cashing in on red-hot oil and gas prices, the energy industry is headed toward the best third-quarter earnings in corporate America, with profits for the major oil companies expected to double from the period last year.
On the New York Stock Exchange (NYSE), Chevron Corp. (NYSE:CHV - news) traded 1-3/16 higher at 87-3/16, Exxon Mobil Corp (NYSE:XOM - news) jumped 1-15/16 to $93-1/4 and Texaco Inc (NYSE:TX - news) gained 1-11/16 at 54-3/4.
-- (M@rket.trends), October 11, 2000