Crude oil futures hit more record highs Monday, nearing US$64 a barrel, reflecting market fears over the U.S. embassy closure in Saudi Arabia and concerns that shutdowns of U.S. oil refineries would reduce supply. Posted on 08/08/2005 9:51:17 AM PDT by M. Espinola
Crude oil futures hit more record highs Monday, nearing US$64 a barrel, reflecting market fears over the U.S. embassy closure in Saudi Arabia and concerns that shutdowns of U.S. oil refineries would reduce supply.
Light, sweet crude for September delivery rose to a high of US$63.95 on the New York Mercantile Exchange before falling back a bit to US$63.75, up US$1.44 at midday.
Prices had settled at US$62.31 a barrel on Friday, a record close for crude since Nymex trading began in 1983.
"The market clearly has the jitters," said Deborah White, energy analyst at SG Securities in Paris.
The Nymex rally received a big boost from blistering gains in gasoline futures, which rose to a new front-month record high of US$1.8690 a gallon, up 3.68 cents, in September. The high, which tops gasoline's last record of US$1.8600 a gallon July 8, reflects the worsening refinery-outage situation in the U.S. that has tightened product supply amid scorching demand for fuel.
Nymex heating oil futures for September traded as high as US$1.7900 a gallon, up 5.88 cents, but remained more than 2 cents off their July 7 record high of US$1.8125 a gallon.
"We had a much lower-than-expected build in natural gas supplies in the U.S. last week and this is also adding to general nervousness," White said.
In London, Brent blend crude futures for September rose as much as US$1.63 to a record high of US$62.70 a barrel on the International Petroleum Exchange.
The market was on edge following Sunday's announcement of a security threat against U.S. government buildings in Saudi Arabia, the world's biggest petroleum producing country.
The planned closure Monday and Tuesday of the U.S. Embassy in Riyadh and consulates in Jiddah and Dhahran was "in response to a threat against U.S. government buildings" in the kingdom, the embassy said, adding it would also limit nonofficial travel of its mission personnel.
It urged Americans residing in Saudi Arabia to keep "a high level of vigilance," but did not elaborate on the nature of the threat.
Meanwhile, analysts said U.S. economic figures on Friday showing payrolls expanded by 207,000 in July, the highest reading in five months, continued to boost bullish sentiment in the market.
"The U.S. economy looks healthy and it's safe to infer that the demand for oil and diesel will remain pretty firm and that the price of oil should be helped along as well," said commodities strategist David Thurtell of Commonwealth Bank of Australia in Sydney.
Oil prices rose even though the Organization of Petroleum Exporting Countries said late Friday that it increased oil production by 300,000 barrels a day in the past two weeks, to around 30.4 million barrels daily.
The market appeared to have largely disregarded the move, as concerns over refinery outages continued to weigh on traders' minds in a time when most refiners are running at full tilt.
ConocoPhillips was the latest to suffer a refinery outage. The company reported planned work and unexpected operational upsets at its 145,800-barrel-a-day refinery in Borger, Texas. The plant's sulfur recovery unit was shut Friday, with a restart planned for Wednesday.
Meantime, a fire broke out at a unit of Sunoco Inc.'s 330,000 barrels-a-day Philadelphia refinery over the weekend, the Philadelphia Inquirer reported Sunday, citing a company spokesman.
The outages have affected approximately 3 percent of the refining capacity in the United States, according to Barclays Capital.
At least seven other U.S. refineries have reported problems of one kind or another in the last two weeks.
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I agree and I believe we have not seen anything yet as far as price increases for oil. I saw something the other day that kind of put in perspective. Oil sells for 18 cents per pint... today's price action has pushed it to 19 cents per pint.
Wishful thinking. Most of the oil that has ever been found is still in the ground. It requires more money to get out of the ground, and oil prices traditionally have not supported the additional investment.
Our prices aren't caused by an actual lack of existing oil, they are caused by man made restrictions in supply. We have declared huge oil-producing swaths of land off limits for drilling. We have elminated refinery construction as demand increases. And we have shut the door to alternative forms of energy such as nuclear.
If reason and common sense could ever sneak past congress without being killed and eaten, the price of energy would be much, much lower and much more stable.
As it is, our current energy policy is essentially a KGB designed plot to destroy us, enacted and crafted by people too stupid to understand what they are doing, still serving a long-dead master.
What do liberals/tree huggers have to do with the price of gas? For simple starters, the over 40 different regional and seasonal blends that must be produced.
Interesting......so if those oil $ are not being used to offset the cost of our efforts, where and who is getting that money? If production is 1 mill/bar per day (which I think is low) in a months time it becomes 30 mil X $ 60/bar which is around 1.2 billion........pretty good cash flow.
What part of my statement was wishful thinking ? Nothing you said alters the fact that current production is slowing while demand continues to rise. I agree that there is a whole bunch of oil in the ground that won't be produced until prices rise and I agree that limiting areas we could explore has hurt our current situation as well. This does not change the fact that production is peaking. We will NEVER run out of oil but the days of cheap oil are coming to an end.
??? Last March, it took about $1.35 USD to convert to 1 Euro. This morning, that conversion took about $1.23 USD.
Nice to see a fellow financialsense.com listener.
financialsense.com is by far the most informative economic website I have seen. It explains quite clearly what is taking place with our economic world.
321energy.com is another excellent website regarding oil.
The inevitable, impending "bust" is going to be disastrous.
From the EIA
http://www.eia.doe.gov/emeu/cabs/orevcoun.html#Iraq
During 2004, EIA estimates Iraqi oil production of about 2.0 million bbl/d, and export earnings of $18.2 billion -- the highest in nominal terms since 2000. For 2005 and 2006, Iraqi oil export revenues are expected to increase slightly, to $19.3 billion and $19.4 billion, respectively.
At the end of June 2004, when the CPA officially handed over sovereignty to Iraqis, the DFI, with assets from oil export revenues of $10 billion, was to be run by the Iraqi government.
Besides the DFI, a portion of Iraq's oil revenues are also obligated to pay for claims stemming from the 1990/91 Gulf War. In 2003, the percent of Iraqi oil revenues going towards such claims was reduced from 25% to 5%.
Oil Reserves
Saudi Arabia 261.7 billion bbl (2004 est.)
Canada 178.9 billion bbl including shale oil (2004 est.)
Iran 130.8 billion bbl (2004 est.)
Iraq 112.5 billion bbl (2004 est.)
UAE 97.8 billion bbl (2004 est.)
Kuwait 96.5 billion bbl (2004 est.)
Venezuela 78 billion bbl (2004 est.)
Russia 69 billion bbl (2003 est.)
USA 22.45 billion bbl (1 January 2002)
So much for John Kerry's assertion that Bush made a deal with a Saudi Prince to depress oil prices for better poll numbers before the election. BTW-the price to extract oil hasn't changed much over the last 5 years. Oil companies, drillers and traders are wetting their pants over this fact. No use in bitching-oil and driller stocks have been a great refuge the last 2 years. One man's misfortune is another's opportunity...
I didn't know anything about this. Is this because of their (liberals) insistence in producing the different blends? Is this necessary or just some BS on their part? If this is playing a part in the ever increasing price than I can understand your annoyance with it.
Can you elaborate a bit more on this?
November 3rd at 9:51am EST, what do I win?
Here's a what-if scenario: What if the price of oil hits a level that begins to cripple the US economy? The US military is still in Iraq. US soldiers are still dying. We're spending huge sums of money to liberate the Iraqis (what is it currently -- $1 or $2 billion a week?). Why shouldn't we take some of that Iraqi oil, if not as "payment" for our expenses, then at least to keep our own economy going. Because if our economy crashes, then the Iraqis will definitely have no hope.
Just a thought. Maybe a bad one. But just a thought.
No need for a terror strike, OPEC is constraining supply and the Envirowhackos have constrained refinery capacity....so November 3rd at 9:51am EST the Nymex spot crude will hit 100 dollars...because we will have to little heating oil, too little Natural Gas, and to little crude to supply the Chinese, this confluence will kick our butt.
There are a great number of young men with about a week's growth of beard and I would bet many of them use colorant to darken their beards. Their women are as scruffy-looking. What does this have to do with the price of crude oil? I don't know, but there is a lot of money sloshing around this town. Housing hasn't bubbled like San Diego. A lot of the money is in rolling stock, and air and rail traffic has suddenly risen since Friday. Is this the last great boom before the bust on 9 Sept?
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