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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Good point. If memory serves me didn't Rumsfeld or Bush say that Iraqi oil would pay for our mission? Maybe I'm hallucinating.
I agree. Why should WE foot the bill? Did we agree to this before the invasion? I thnk we should be getting the oil at cost.
All the different blends are required by the EPA for environmental protection reasons.
You may be, I don't know, but not on this subject. I remember the same thing. I think that the White House is so insistent upon proving the "No War for Oil" crowd wrong that this was abandoned.
So what do the libbies have to do with it?
There was some talk of that, it did happen, but the decision was that we were not going to tap Iraqi oil to pay the bill.
What do libbies have to do with it? Do you really need to ask?
Some talk? Some talk? With great regularity the administration and supporters in congress told us that the war was going to pay for itself with oil revenues.
It was far more than "some talk."
Hahaha ... no, I guess I already know the answer to that!
Along the lines of today's discussion of how the housing bubble will deflate rather than pop, it would most likely be the same for the general economy. There is so much money sloshing around that just hitting that level--whatever it is--won't have an instantaneous effect, but the effect will be spread out over several years. Things will gradually get harder to handle. In a decade or so we will look back and see that we aren't doing so well, but the SUVs will continue to go to the mall and money will be spent on needs no matter how unnecessary those needs really are.
You win praise, honor, and stuff like that...
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 [sic] I can understand your annoyance with it.
Oil and real estate prices are being manipulated -- more fraud and corruption. There is NOTHING else to blame for the ever-increasing prices. The imminent "bust" is going to be catastrophic.
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>>>With great regularity the administration and supporters in congress told us that the war was going to pay for itself with oil revenues.
An attempt by the Senate to have the Iraqis pay even part of the costs was beaten back by the threat of a Presidential veto.
Here is a link to an article explaining some of the issues surrounding the oil revnues.
http://www.csmonitor.com/2005/0714/p02s01-woiq.html
And CA electricity prices more recently.
Not to quibble, but it turned out to be some talk. By the time oil was being produced none of it was to go to finance the war. That is probably the only reason there haven't been even more attacks on the pipelines. Who is running the oilfields these days? Is it the State of Iraq, or is it the usual big oil companies?
What "fraud and corruption" is manipulating real estate prices?
Thanks. Being out in Michigan, this Real Estate bubble isn't nearly as out of control as it is in other parts of the country. The main reason I am concerned about this is because the wife & I just bought two "investment" properties and want to get a third. Needless to say this "imminent burst" worries me greatly.
At the end of the day it became "some talk", but during the run up to war and the selling of the war to America, one of the major talking points was that it would pay for itself. I don't consider that to be "some talk."
It might be interesting to note that at the time of the Constitutional convention it was generally known that there was no corruption in American gov't. That might be hard to imagine, but that was the case. However, it was also known at the time that the situation could change as America developed and got rich.
I need cash to pay for eight dollar a gallon gas......
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