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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Think about what that will do for our balance of payments and our economy.
The money in our pockets will soon begin to grow faster than fuel prices.
So9
You are right. I do not even want to think about Labor Day weekend.
If - if for some unknown reason the geostrategics cool off some, crude will most likely have an abrupt profit taking reversal, and then head right back up and beyond current levels, contingent on numerous factors.
I fail to see any reason why oil prices should shoot up because of an embassy closure
No worries here, the pork will be signed today. (sarcasm)
The last time those pinkos went to their local gas station they went into shock! :)
We haven't built a refinery in 30 years in this country. We can not drill for oil in ANWAR in a section specifically created FOR DRILLING when ANWAR was created. And you think suddenly we will be able to engage in other forms of oil extraction in this country?
The real answer to our oil problems is to ignore the enviro wackos and start exploring and pumping like never before. Start drilling the gulf. Start drilling off California. Start drilling ANWAR. Start drilling the Atlantic side of Florida. And build Nuclear Reactors!
Another component of reducing gas prices I forgot to list is the reduction of the over 40 different blends that must be refined and distributed around the country. Regional blend requirements from the EPA add a great amount of cost to gas as well.
Having shifted a chunk of my investment money into small well drilling stocks about 6 months ago has proven VERY fruitful!
Pinkos, liberals, and democrats in congress have been demanding higher gas prices for decades. Of course, every time the price goes up a nickle they demand lower prices.
"Gas prices shave NOT hit record levels yet"
Oh don't give us that unmittigated B.S. about "when you adjust for inflation" because a lot of us were not old enough to be driving in 1973 and don't give two S--TS what gas prices were then. We care what we are paying now and it's rising to ridiculous levels.
All of this being driven by speculation. Oil should be around $50.00/bbl max. I have noticed that dollar has given back most of the early summer gains.
Something is going on.
Right. I can go to bed with yet another hour of daylight outside and I close my eyes. When we go to bed at 9 now, it is still light out. What good that does me I don't know. Soon the days will be short anyway with winter coming. You can play with the clocks all you want. The daylight will still be short.
I don't give two shits what gas cost in 1973 either. But I do care about accuracy and honesty.
Nymex Crude $63.80, UP $1.49 a barrel as of this posting.
For the record:
Each cent up/down on a straight futures is worth $10. 149 cents X $10 = a lot of money per contract, so far for today's session.
Crude options are a bit lower, due to various trading factors.
actually - that may well be the long term "solution" to the oil price - a Fed induced recession in the US, which will also throw china into recession.
You could be paying $6.70 a gallon in Norway. Gas is still cheap by historic standards. Be glad you're living in America.
because the market is driven by speculation and fear.
who cares what gas costs in a tiny country whose people have no where to go?
IMO .. I think the market is using that as an excuse
We haven't built a refinery in 30 years in this country. We can not drill for oil in ANWAR in a section specifically created FOR DRILLING when ANWAR was created. And you think suddenly we will be able to engage in other forms of oil extraction in this country?
Yes, I think we are going to run flat out of refinery capacity this year or next and when cars and heating oil tanks have been empty for a few weeks, when power companies have to shut down major power plants, congress will bulldoze the EPA.
The real answer to our oil problems is to ignore the enviro wackos and start exploring and pumping like never before. Start drilling the gulf. Start drilling off California. Start drilling ANWAR. Start drilling the Atlantic side of Florida. And build Nuclear Reactors!
A very good start, but it wouldn't be nearly enough.
SO9
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