– Oil Crisis...is the world about to be shocked

Oil at record highs
By Corinne Suissa

World oil prices made new strong gains Thursday amid concerns about refinery capacity and huge demand from drivers.

New York's main contract, light sweet crude for September delivery, climbed 52 cents to 61.38 a barrel, having earlier been as high as 61.86 dollars. London's benchmark Brent North Sea crude for delivery in September rose 47 cents to 60.12 dollars, having earlier been at 60.76 dollars.
 

"We are seeing an increase in production but I think demand is going to be overwhelming and going to reach a fever pitch."

On Wednesday New York prices hit a record of 62.50 dollars, while in London, Brent hit a new high of 61.26 dollars.

Phil Flynn of Alaron Trading said fears of shortages of natural gas shortage and fuel for car drivers had badly influenced the market.

US authorities said natural gas stocks increased 1.05 billion cubic metres last week to 64.5 billion cubic metres. Flynn said this increase was too small. And incidents at several refineries in recent weeks have fueled market fears as consumption hits a peak with the summer driving season.

Sentiment was not helped by the failure of ExxonMobil to reopen its huge refinery in Joliet, Illinois as scheduled on Thursday, said Flynn. "This added to the bullishness of the market."

Joliet, which has a refining capacity of 245,000 barrels a day, has been closed since the weekend. Flynn predicted that the oil price could reach 70 dollars a barrel in coming weeks.

"The bottom line is that worldwide economic growth is strong, there are very strong numbers here in the US, very very hot temperatures," he said. "We are seeing an increase in production but I think demand is going to be overwhelming and going to reach a fever pitch."

Stocks of gasoline dropped by 4.0 million barrels to 205.2 million in the week ending July 29, the US Department of Energy (DoE) said on Wednesday. Analysts had forecast a drop of 800,000.

The DoE revealed also that crude inventories rose by 200,000 barrels to 318 million barrels, while analysts had expected a drop of about 1.4 million barrels.

An analyst with Societe Generale, Deborah White, noted that "obviously there is no crude shortage".

Stockpiles of distillates, which include heating oil and diesel, climbed 1.5 million barrels to 127.3 million, below analysts' expectations for a rise of 2.0 million.

Oil prices have been reaching record highs on fears of insufficient supplies of heating oil during the fourth quarter, when the northern hemisphere winter begins. Now there is concern also about supplies of gasoline, especially as summer vacations take hold in Europe and the United States.

Sucden analysts said the market remained "bullish", owing in particular to the active hurricane season in the US Gulf of Mexico and ongoing US refinery problems.

Oil kingpin Saudi Arabia and other OPEC members moved swiftly to reassure jittery oil markets this week, saying there was likely to be no change in Riyadh's policy following the death of King Fahd.

King Fahd was for 23 years at the helm of the world's largest oil producer, which currently has output of about 9.5 million barrels per day with the capacity for an additional 1.5 million barrels. He was succeeded by his half-brother, former crown prince Abdullah bin Abdul Aziz.
 

Source	back to top	back to Headline Index
home	Word from main	back to Oil Crisis Word from