Oil Above $33 As Data Deepens Fears

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Oil Above $33 As Data Deepens Fears October 25, 2000

SINGAPORE (Reuters) via NewsEdge Corporation -

Oil prices were higher and firmly entrenched above $33 a barrel on Wednesday as key U.S. oil data increased the fear of a supply crunch in winter heating oil supplies.

Prices were also buoyed by Middle East tensions given a truce agreed in Egypt last week has so far done little to quell the violence between Israelis and the Palestinians.

U.S. benchmark light sweet crude futures for December were up 15 cents at $33.52 a barrel at 0530 GMT, after closing 39 cents lower at $33.37 in New York.

The weekly American Petroleum Institute (API) report, released late on Tuesday, showed nationwide heating oil inventories fell to stand more than 30 percent below year-ago levels ahead of the peak demand winter months.

The report said stocks of distillates, which include heating oil, fell 552,000 barrels in the week ended October 20.

API said crude stocks rose 1.7 million barrels, below market expectations that had called for a 2.5 million barrel increase.

``The bullish part of this report is we're still not building heating oil inventories and this is the season when we should be building,'' Tom Bentz, analyst and trader at Paribas Futures Inc of New York, said.

The U.S. Department of Energy (DOE) is due to release a similar stock report later on Wednesday.


Oil prices are already supported by Middle East tensions, which show no signs of dissipating.

President Clinton has proposed inviting the leaders of Israel and the Palestinians to separate meetings in an effort to quell the bloodshed.

Two Palestinian youths were shot dead on Tuesday in Israel-occupied territories, bringing the death toll in 27 days of fighting to 131.

The Israeli army said on Tuesday it was digging in for a long conflict while Prime Minister Ehud Barak pressed for a coalition government with rightist Ariel Sharon.

Even an impending rise in oil output from the Organization of the Petroleum Exporting Countries (OPEC) failed to deflate prices.

OPEC President Ali Rodriguez said on Tuesday the cartel was poised to raise output by 500,000 barrels per day within days if OPEC's basket of crudes remained above $28 a barrel but said it would consider a rise in supply beyond this ``very carefully.''

Amid all the hullabaloo in oil markets, the three largest U.S. oil companies turned in record third-quarter earnings on Tuesday.

While U.S. consumers were grappling with high fuel costs and faced the prospect of a shortage in winter heating oil, Exxon Mobil Corp (XOM.N), Chevron Corp (CHV.N) and Texaco Inc (TX.N) all posted profits that beat expectations.


-- Martin Thompson (mthom1927@aol.com), October 25, 2000

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