Posted on 05/05/2004 3:52:26 PM PDT by Flavius
Reuters Oil Surges to New Highs on Security Fears Wednesday May 5, 3:35 pm ET By Richard Mably
LONDON (Reuters) - Oil prices surged again on Wednesday, setting fresh 13-year highs, on worries about Middle East supply security and fears for summer gasoline shortages in the United States. U.S. light crude (CLc1) closed 59 cents or 1.5 percent higher at $39.57 a barrel, its highest settlement price since ending at $39.69 on Oct. 12, 1990, two months after Iraq invaded Kuwait in the crisis that led to the first Gulf War.
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The contract traded as high as $39.74, the highest since spot prices hit $39.99 on Feb. 27. 2003, in the buildup to the U.S.-led war against Iraq. It traded as low as $38.49.
In London, Brent crude (LCOc1) settled 79 cents or 2.2 percent higher at $36.72 a barrel, also its highest settlement since October 1990. The contract peaked at $36.90 a barrel in intraday trading.
"Violence in the Middle East specifically targeting oil assets has raised the bar with regards to the fear of supply disruption," said Josh Sadler, energy analyst with Societe Generale.
An attack on Saturday by Islamic militants on foreign workers at a petrochemical plant in the Saudi Red Sea city of Yanbu followed a failed suicide bombing mission 10 days ago at Iraq's Basra oil export terminal.
Supply security concerns have drawn investment funds to oil. The Goldman Sachs commodity index (^GNX - News), heavily weighted toward energy, set an all-time high on Wednesday.
"Saudi Arabia's oil infrastructure has three major export arteries and looks as defensive as it could be to attack. However the risks have clearly risen," said oil analysts at Deutsche Bank in a report.
Weekly gasoline inventory data from the United States at first sight appeared to provide some comfort for dealers worried about a summer supply crunch at U.S. pumps. The U.S. Energy Information Administration said gasoline stocks rose four million barrels to 204 million barrels in the week to April 30, above forecasts for a 1.5-million-barrel stockbuild.
But dealers said they remained worried that inventories may not build sufficiently to meet peak summer U.S. demand.
"The question being asked is whether stockbuilds in May and June will be enough to meet demand in July and August, when everyone takes to the road for vacation, and the industry's answer at the moment is 'no'," said Refco broker Nauman Barakat.
U.S. demand for motor fuel in the United States is rising fast, buoyed by motorists favoring low-mileage-per-gallon sports utility vehicles. The EIA said consumption over the last four weeks averaged 9.1 million bpd, up 3.8 percent over the same period last year.
U.S. gasoline inventories remain 3.3 million barrels lower than a year ago and total U.S. commercial oil reserves of 299 million barrels are at an 18-million-barrel deficit versus the same time last year.
Traders have been looking to the Organization of the Petroleum Exporting Countries for signs that it might ease production limits to contain price increases.
OPEC (News - Websites) President Purnomo Yusgiantoro on Wednesday sought to soothe market concerns but declined to say whether or not the cartel is likely to raise production limits at a meeting in Beirut on June 3.
Oil also found support on Wednesday from potential supply problems in Nigeria and Georgia.
Police said hundreds of Muslims had been killed by Christian militia in ethnic fighting in the central Nigerian town of Yelwa. While Yelwa is far from the country's Niger Delta oil facilities, the violence fueled fears of a possible disruption from Africa's largest crude producer.
In Georgia, there were concerns about a disruption from the 200,000 barrel a day Black Sea Batumi export terminal. Georgian Defense Minister Gela Bezhuashvili told a local television station that the terminal, in the Adzhara region, had been mined.
Bezhuashvili did not say who had laid the explosives but rebel leader Aslan Abashidze is in control of Adzhara and its capital Batumi, in a stand-off with the Georgian government over control of the region.
I'm not so much worried about the price of oil as the price of everything else. The regular commodity items I purchase at the grocery store are up between 5% and 20% in the last month, by rough math. That includes bread, milk, cheese and coffee.
a. on worries about Middle East supply security
b. fears for summer gasoline shortages in the United States
c. overproduction
d. increased demand from China
e. instability in Venezuela
f. religious wars in Africa
g. today's news from Iraq [any day, no day in particular]
h. more 3-ton SUVs than ever pounding pavement
i. heat wave in wherever
j. a mysterious train explosion in North Overshoe, Korea
k. Kerry fell off a sports appliance again
If you really want to get scared, visit your local building supply store like I did today. I'm still in shock.
Item: Plywood up 300% in one year. $30 per 4x8' sheet of the crappiest 1/2" CDX you can buy.
Item: Rebar and welded wire fabric up 300% in one year. #4 rebar was $4 per stick, now $12. 6x6 #10wwmf was $60 per roll, now $150.
Item: Today I paid $2 per linear foot for 1x8 rough-sawn cedar for trim around a window.
This is just going to kill the building industry.
Ding, ding, ding! We have a winner!
They are probably the ones whining the loudest too!
Now is the time to pounce on the Dimocrats for their lack of foresight. Refineries, drilling, logging - the extremest environwackos have contributed greatly to rise of commodity prices. This should be pointed out day after day after day.
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