Oil prices remain near record highs
Friday, 14 September 2007
LONDON, Sept 13(AP): Oil prices remained near record highs Thursday after US crude inventories fell and drove oil futures in the previous session above $80 a barrel for the first time ever.
Light, sweet crude for October delivery on the New York Mercantile Exchange lost 3 cents to $79.88 a barrel in electronic trading by midday in Europe.
The contract climbed as high as $80.18 a barrel Wednesday before settling at a record close of $79.91 a barrel, up $1.68.
Despite Wednesday's jump, oil is still well below inflation-adjusted highs hit in early 1980.
Depending on the adjustment, a $38 barrel of oil in 1980 would be worth $96 to $101 or more today.
"The world economy in the last few years has shown to be quite resilient to strong oil pricing, but this is certainly a new territory for crude oil and if sustained there is bound to be some impact on the economy," said Victor Shum, an energy analyst at Purvin & Gertz in Singapore.
However, Shum said profit-taking in the near term will limit the oil price's ability to sustain above the $80-a-barrel level.
Analysts said profit-taking was behind a dip in prices early Thursday, but they were seen gaining support from fears about weather in the Gulf of Mexico, where Hurricane Humberto reached Texas early Thursday. Oil facilities have been unaffected so far.
The weekly report Wednesday by the U.S. Energy Department's Energy Information Administration said crude oil supplies fell 7.1 million barrels in the week ended Sept. 7, more than twice the average 2.7 million-barrel decline analysts surveyed by Dow Jones Newswires had expected.
Despite the decline, however, supplies were not unusually low, analysts said.
"Even though we saw a sharp drawdown in crude oil inventories, inventories are really still within the average range for this time of the year. That should be one calming reality," Shum said.
Gasoline inventories fell by 700,000 barrels, slightly more than the expected 500,000 barrel decline.
Refinery utilisation fell by 1.6 percentage points to 90.5 percent of capacity. Analysts had expected a 0.1 percentage point decline. And inventories of distillates, which include heating oil and diesel fuel, grew by 1.8 million barrels, more than the 1.4 million-barrel increase analysts had expected.
Oil's recent advance, analysts said, has been largely due to speculative buying by big investment funds.
In London, October Brent crude fell 30 cents to $77.38 a barrel on the ICE futures exchange.
Heating oil futures lost 0.40 cent to $2.2151 a gallon while gasoline futures were flat at $2.0160 a gallon. Natural gas futures inched down 2.7 cents to $6.411 per 1,000 cubic feet.
Light, sweet crude for October delivery on the New York Mercantile Exchange lost 3 cents to $79.88 a barrel in electronic trading by midday in Europe.
The contract climbed as high as $80.18 a barrel Wednesday before settling at a record close of $79.91 a barrel, up $1.68.
Despite Wednesday's jump, oil is still well below inflation-adjusted highs hit in early 1980.
Depending on the adjustment, a $38 barrel of oil in 1980 would be worth $96 to $101 or more today.
"The world economy in the last few years has shown to be quite resilient to strong oil pricing, but this is certainly a new territory for crude oil and if sustained there is bound to be some impact on the economy," said Victor Shum, an energy analyst at Purvin & Gertz in Singapore.
However, Shum said profit-taking in the near term will limit the oil price's ability to sustain above the $80-a-barrel level.
Analysts said profit-taking was behind a dip in prices early Thursday, but they were seen gaining support from fears about weather in the Gulf of Mexico, where Hurricane Humberto reached Texas early Thursday. Oil facilities have been unaffected so far.
The weekly report Wednesday by the U.S. Energy Department's Energy Information Administration said crude oil supplies fell 7.1 million barrels in the week ended Sept. 7, more than twice the average 2.7 million-barrel decline analysts surveyed by Dow Jones Newswires had expected.
Despite the decline, however, supplies were not unusually low, analysts said.
"Even though we saw a sharp drawdown in crude oil inventories, inventories are really still within the average range for this time of the year. That should be one calming reality," Shum said.
Gasoline inventories fell by 700,000 barrels, slightly more than the expected 500,000 barrel decline.
Refinery utilisation fell by 1.6 percentage points to 90.5 percent of capacity. Analysts had expected a 0.1 percentage point decline. And inventories of distillates, which include heating oil and diesel fuel, grew by 1.8 million barrels, more than the 1.4 million-barrel increase analysts had expected.
Oil's recent advance, analysts said, has been largely due to speculative buying by big investment funds.
In London, October Brent crude fell 30 cents to $77.38 a barrel on the ICE futures exchange.
Heating oil futures lost 0.40 cent to $2.2151 a gallon while gasoline futures were flat at $2.0160 a gallon. Natural gas futures inched down 2.7 cents to $6.411 per 1,000 cubic feet.