Oil Prices Briefly Rise Above $55 a Barrel - San Francisco Chronicle
Crude oil futures briefly rose above $55 a barrel Wednesday as traders shrugged off evidence of
rising supplies in the United States and focused instead on strong demand, cold weather and the
weak dollar. Oil prices retreated at the end of the day, though prices remain more than 50
percent higher than a year ago.
Light, sweet crude rose as high as $55.65 per barrel on the New York Mercantile Exchange — just
two cents short of the intraday record — before slipping to settle at $54.77, a gain of 18 cents
from Tuesday's close.
The highest Nymex settlement price on record was $55.17 per barrel, set twice in late October,
although prices would have to surpass $90 per barrel to meet the inflation-adjusted peak set in
1980.
While analysts said the recent runup in oil prices has also been speculative in nature, they
conceded that prices were likely to remain high so long as the economy continues to grow.
"There is no shortage anywhere," said James Cordier, president of Liberty Trading Group in St.
Petersburg, Fla.
Even the top executive of Exxon Mobil Corp., the world's largest oil company, said Wednesday that
energy markets were red-hot beyond what supply and demand alone would dictate.
"We are in the mode where the fundamentals of supply and demand really don't drive the price,"
Lee Raymond, the chairman and chief executive of Exxon Mobil, said during the company's annual
analyst conference in New York.
Raymond said he believed the main reason for the "risk premium" placed on oil prices these days
was the market's fear of a terror attack or some other political action that would disrupt the
global oil supply chain and cause a real shortage. This premium would be smaller, Raymond
suggested, if not for the fact that producers are pumping just slightly more than the 84 million
barrels a day the world is consuming.
To that end, OPEC oil ministers have signaled they will not raise output at their meeting next
week — a stance that analysts said was not surprising considering the organization already is
producing over its quota.
In the U.S. government's latest petroleum supply report, inventories of crude oil rose, as
expected, while supplies of gasoline and distillate fuel, which includes heating oil, showed
modest declines.
"Supplies in the U.S. are at very comfortable levels coming out of the heating season and months
before the driving season," Cordier said.
Still, gasoline prices are also on the rise, with regular unleaded averaging $2 a gallon
nationwide, according to the Energy Department. While some Democrats in Congress have called on
President Bush to release oil from the nation's emergency reserve to ease market conditions, the
administration said Wednesday it had no such plans.
"We do not believe it (the reserve) should be used to manipulate prices or for political
purposes," White House press secretary Scott McClellan told reporters.
On bond markets Wednesday, the yield on 10-year Treasury notes rose as inflationary concerns
grew. However, analysts said it was faster-than-expected economic growth underpinning those
concerns, not high oil prices.
"I just don't hear from anybody that high oil prices will derail economic expansion at this
time," said Steve Stanley, the chief economist at RBS Greenwich Capital in Connecticut.
Also driving prices higher was the strong euro, which rose above $1.33, its highest level since
early January.
Because crude is sold worldwide in U.S. dollars, and because the currency has lost 8 percent of
its value against the euro in the last four months, OPEC nations have signaled support for higher
oil prices as a hedge to maintain their buying power in Europe.
Venezuela, Qatar and Algeria have all come out against raising output, and OPEC President Sheik
Ahmed Fahd Al Ahmed Al Sabah of Kuwait said Sunday that although prices were high, the market was
well supplied.
The U.S. Energy Department's weekly petroleum supply report showed inventories of crude oil rose
last week by 3.2 million barrels to 302.6 million barrels, or 9 percent above year ago levels.
The nation's inventory of gasoline declined by 200,000 barrels to 224.3 million barrels, or 11
percent above year ago levels, the agency said. The supply of distillate fuel, which includes
heating oil and diesel, shrank by 800,000 barrels to 109.2 million barrels, or 1 percent below
year ago levels. In other Nymex trading, April gasoline futures fell less than a penny to
$1.5329, heating oil futures rose less than a cent to $1.5325 per gallon and natural gas futures
climbed 3.3 cents to $6.88 per 1,000 cubic feet.
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US bullish in 2005 oil price forecast - Financial Times
The US government on Tuesday emerged as one of the most bullish forecasters of oil prices, raising its outlook for this year to nearly $50 a barrel.
The report by the US Department of Energy pushed Brent crude futures, the European benchmark, to an all-time high in nominal terms of $53.20 a barrel. The rising oil price also helped propel the Reuters CRB index, which tracks a basket of commodities, to a 21-year high. Concern about high oil prices will dominate the Organisation of the Exporting Petroleum Countries meeting in Isfahan, Iran, next Wednesday.
The US estimated in its March short-term outlook report that the 2005 average price of West Texas Intermediate (WTI), the US oil benchmark, to $48.95 a barrel, up 7.5 per cent on last month's report. It also raised the 2006 WTI average to $47.05 from $43.20 previously, indicating it believes high oil prices are here to stay.
This time last year, it predicted a price of only $29.40 in the forecast for 2005. The Department of Energy warned yesterday: “Oil prices are likely to be sensitive to any incremental supply tightness that appears during periods of peak demand worldwide. Imbalances in light product markets could cause light crude oil prices to increase to well above $50 per barrel, as has recently occurred.”
It said its forecast was based on Opec not cutting production at the Isfahan meeting.
The report saw no sign of slowing demand, predicting an increase in global oil consumption averaging 84.7m barrels a day in 2005, up 200,000 b/d from the February report. The increase was due to China, where demand is forecast to average 7.4m b/d, up 12 per cent from last year.
Washington is concerned about supplies from non-Opec countries because lower production would increase dependence on Opec oil. It said lower production in Mexico and the North Sea would contribute to a 300,000 b/d decline in non-Opec supply forecasts to
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Bush talk on Middle East spark crude oil rally to near record - Channel News Asia - Singapore
Crude oil futures flirted with new record highs on global markets after comments by US President George W. Bush on the Middle East deemed aggressive by traders.
On the New York Mercantile Exchange, the April contract soared as high as 55.15 dollars a barrel after the Bush remarks. The closing price was 54.59 dollars, a barrel, up 70 cents from the prior day and the highest close since last October.
Brent North Sea crude soared to an intraday record 53.30 dollars in London, then settled back at 52.84, a jump of 75 cents.
Bush warned Syria on Tuesday to leave Lebanon before the May parliamentary elections there, hailing a "thaw" he said was melting authoritarian rule throughout the Middle East.
The US leader had other words of warning for Damascus and Tehran, linking a recent suicide bombing in Tel Aviv to extremists based in Syria.
Traders reacted with concern for the outlook in the Middle East.
Donald Luke at Fimat USA said the tone of the Bush speech "sounds like threatening remarks" that could result in more instability.
"If we go into Lebanon, it would be supportive to the price of oil, but I don't think it's a possibility right now."
Bush warned Syria on Tuesday to leave Lebanon before the May parliamentary elections there, hailing a "thaw" he said was melting authoritarian rule throughout the Middle East.
The US leader had other words of warning for Damascus and Tehran, linking a recent suicide bombing in Tel Aviv to extremists based in Syria.
"We had some comments from George Bush that were fairly aggressive towards some of the Middle East nations including Syria and Iran," said Bache Financial trader Tony Machacek.
"This again reiterated concerns about the instability of the Middle East."
"The market is very sensitive to any comment that George Bush makes because we are not really quite sure what his next move might be," Machacek said.
Iran -- the second biggest oil producer in the Organization of Petroleum Exporting Countries -- produces approximately 3.7 million barrels per day and has reserves of almost 100 billion barrels.
OPEC is to meet to discuss production next week in Isfahan, south of Teheran.
Syria was considered a much smaller oil producer, providing less than 500,000 barrels per day, but its proximity with Iraq worried investors.
Another factor behind surging oil prices was Royal Dutch/Shell's decision to shut down its platform in the Draugen oilfield, Norway's main producing field, owing to a leak of condensate, a very light type of oil.
Royal Dutch/Shell operates the only platform in the Draugen field, which produces 120,000 barrels per day.
It could take days to get production going again, according to a company spokesman.
Finally, traders geared up for the latest weekly snapshot of US inventory data, to be published Wednesday.
Oil prices have now more than doubled since early 2002.
Adjusted for inflation, however, they remain far below levels reached in the wake of the 1979 Iranian revolution when prices surged to upwards of 80 dollars a barrel in today's money.
Phil Flynn, analyst at Alaron Trading, said the weak dollar is also a factor in the recent runup because "it's giving OPEC the excuse they need not to increase production ... They can blame the dollar for the rise and not shortages in production."
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Oil prices to continue to rise, says Hugo Chavez - Financial Express - Bombay,
India
Venezuela, the fifth largest oil exporter in the world, on Monday said it expected the oil price to move in the range of $30 to $40 per barrel and it would "keep increasing" in future but maintained Opec could not be blamed for the rise.
"Opec will continue to monitor the oil markets but the world should forget about cheap oil in the same way it is useless to find a car that costs $1,000," Venezuelan President Hugo Chavez told reporters here.
"There is an evolution of a number of variables in the international oil market. My expectation is that the price of oil will be around $30 to $40 per barrel. It will keep increasing in future."
Asserting that the Organisation of Petroleum Exporting Countries was not to blame for the rising oil prices, he said, "It is not in Opec that we find a solution for the high oil prices" and explained the factors including the Iraq war and the recent US threats to attack Iran which had pushed up the prices. He said before the war, Iraq was producing two million barrels of crude a day which now had shrunk to around one million barrels.
"The person who wants to take the oil prices to $260 a barrel is called Mr (George W) Bush. Bush wants this oil to reach $260. I would not be surprised since he is a man who has huge oil business," he said.
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High oil prices dampening growth as Japan, Germany toil to rebound - Bloomberg
European Central Bank president Jean-Claude Trichet and his Group of 10 (G-10) counterparts may say record oil prices risk damping global economic growth as Germany and Japan struggle to rebound from fourth-quarter contractions. The central bankers “will focus more again on the risks to growth, such as the oil price” when they meet in Basel, Switzerland on Monday, said Holger Schmieding, co-head of European economics at Bank of America in London.
“We’re seeing good figures from the US, the global situation is looking robust, but Europe is still lagging quite a bit behind.”
Oil price above $50 per barrel is threatening to cool global growth and weigh on export prospects in Japan and Germany, the second and third-largest economies in the world. ECB last week cut its 2005 euro-region growth forecast to about 1.6%, less than half the 3.5% rate the International Monetary Fund (IMF) predicts for the US.
Mr Trichet said last week that the 26% surge in crude prices this year, to a record $53 per barrel on March 3, is jeopardising growth.
US treasury secretary John Snow said on Sunday oil prices are creating “headwinds” for the economy. The oil price is “one of the risk factors,” said Bank of Japan governor Toshihiko Fukui in Basel on Sunday.
Mr Trichet will address the media in Basel after chairing the G-10 discussions, which will also be attended by Mr Fukui and US Federal Reserve vice-chairman Roger Ferguson. The bimonthly meeting is held under the auspices of the Bank for International Settlements, which serves the world’s central banks.
“They’ll probably discuss whether oil prices will be able to show the same impact again as in 2004, when they significantly hit global growth,” said Thorsten Hock, an economist at Zuercher Kantonalbank in Zurich.
Growth in the dozen-nation euro region will probably slow this year after unemployment in Germany rose to the highest since World War II and as the global growth cools. Retail sales in the region fell the most in nine months in February amid concern about rising unemployment and oil prices, the Bloomberg purchasing managers index showed on Tuesday.
Japan’s economy fell into recession last year for the fourth time since 1991 as exports slowed and consumer spending fell. Mr Trichet, who used the Basel meet twice last year to warn investors against “brutal” currency shifts, may send a few new signals about the exchange rate after the euro’s 3% retreat against the dollar this year.
“Mr Trichet has sometimes used the meetings to influence the euro-dollar exchange rate, but that’s not needed at the moment,” said Astrid Schilo, an economist at IDEA Global in London. “They can be happy with the level and that’s why we can’t expect much from that side.”
For now, the US and China are still driving global growth. Employers in the world’s largest economy added 262,000 workers in February, the most since October, a report from the labour department showed on March 4.
The US Federal Reserve has raised its overnight lending rate six times since June, taking borrowing costs to 2.5%. By contrast, the ECB has left its benchmark rate at 2% since mid-2003.
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Fears over oil supplies - Melbourne Herald Sun - Australia
IRAN and Venezuela - two of the world's major oil nations - have responded to US policy to get
tough on rogue states by threatening to cut supplies to world markets.
Venezuelan president Hugo Chavez also said the world should forget about any return to cheap oil
prices.
"The world should forget about cheap oil . . . it won't happen," he said, adding that oil would
remain between $US40 and $US50 a barrel.
Iran's top nuclear official Hassan Rowhani said an oil crisis would result for the US and Europe
if Tehran was taken before the UN security council over its nuclear program.
He rejected outright both US and European demands for Iran to halt uranium enrichment.
Taking the matter to the security council would be "playing with fire", he said.
Iran is the second largest oil producer member of the Organisation of Petroleum Exporting
Countries and Venezuela is the only South American member of the cartel.
"The first to suffer will be Europe and the United States themselves, this would cause problems
for the regional energy market, for the European economy and even more so for the United States,"
Mr Rowhani said at a conference in Tehran on nuclear technology and sustainable development.
EU members Britain, France and Germany are trying to convince Iran to dismantle nuclear fuel work
-- which the US says is part of a covert atomic weapons development -- in return for economic and
political rewards.
Tehran has argued that it wants to enrich uranium to generate atomic energy for purely civilian
use, and argues such work is authorised by the nuclear Non-Proliferation Treaty.
Light sweet crude for delivery in April closed at a four-month high of $US53.78 a barrel in New
York on Friday. Oil prices have been rising amid concern the global economy will need more oil to
keep up with economic growth and that OPEC may be keeping supplies tight.
Mr Chavez renewed charges at the weekend that Washington was trying to kill him, a claim the Bush
Administration brands ridiculous.
The Venezuelan leader deliberately sought to distance Venezuela from US markets by signing a
major oil deal with fuel-hungry India
Indian Prime Minister Manmohan Singh agreed to take a 49 per cent stake in a Venezuelan oil
field.
The US imports 15 per cent of its crude needs from the Latin American nation.
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