Posted on 08/12/2005 1:40:00 PM PDT by Jomini
Oil prices settled at a record high near $67 today, as U.S. refinery outages looked set to test gasoline supplies in the world's biggest-consuming nation.
The threat of hurricanes in the Gulf of Mexico and concerns over Iran's decision to resume uranium-conversion activities also fueled the price increase, analysts said.
But some traders said purely speculative buying was a big factor behind the $10 per barrel surge in just over three weeks.
"This is a bubble that will have to burst at some point," said Mike Fitzpatrick, an oil broker at Fimat USA in New York. A large increase in supply or a noticeable dropoff in demand will be needed to end the buying frenzy, he said.
Light sweet crude for September delivery gained $1.06 to settle at $66.86 a barrel today on the New York Mercantile Exchange - the highest close since Nymex trading began in 1983. Crude peaked at $67.10 earlier in the day, up from Thursday's settlement price of $65.80. On July 20, prices settled at $56.72.
Oil prices are 46 percent higher than a year ago, but they would need to surpass $90 a barrel to exceed the inflation-adjusted peak set in 1980.
Gasoline futures climbed to $1.990 a gallon, an increase of 4.92 cents. Heating oil futures rose 0.7 cent to $1.9050 a gallon.
In London, Brent crude for September delivery closed at $66.45 a barrel, up $1.07.
Tropical Storm Irene strengthened today as it neared the East Coast, but its threat to land was uncertain, forecasters said. The five-day forecast from the National Hurricane Center suggested Irene could approach the coastline between North Carolina and Massachusetts, or curve out to sea.
With bullish sentiment unabated and crude prices hitting consecutive highs this week, analysts expect September contracts to test the $70 a barrel threshold.
Iran's nuclear program has drawn criticism from the West. The country is the No. 2 producer in the Organization of the Petroleum Exporting Countries, which produces roughly a third of the world's oil.
Analysts said gasoline demand, currently at its peak in the U.S. summer driving season, was pushing crude's gains. Last week, U.S. gasoline demand picked up 1.4 percent from a year ago, according to government data. Coupled with new reports of refinery outages this week, traders fear U.S. refiners, already running at 95 percent of capacity, are straining to satisfy the rising demand.
"People fear there won't be enough gasoline at a time when it's so greatly demanded, so they're just buying, buying and buying," said Tetsu Emori, chief commodities strategist at Mitsui Bussan Futures in Tokyo.
The U.S. Energy Department said Wednesday that gasoline inventories fell 2.1 million barrels to 203.1 million barrels last week.
"The refinery breakdowns are a big issue; they're happening at a time when gasoline supplies are already very tight," Emori said.
Among the latest refinery outages: several units at ConocoPhillips' 306,000 barrel-a-day Wood River, Ill., refinery were shut after a thunderstorm caused a power failure at the plant, while Premcor Inc.'s 190,000-barrel-a-day refinery in Memphis, Tenn., was shut due to a power outage.
Also, BP PLC shut down a hydrogen-recovery unit Aug. 10 at its massive 470,000 barrel-a-day Texas City refinery, following a decision by the company to keep high-pressure units off line until they can be proven safe, BP spokesman Scott Dean said Thursday.
The three other high-pressure units at the refinery were already off line Wednesday and will be kept down pending investigations, Dean said.
The incidents are the latest in a string of outages to hit about a dozen U.S. refineries that together can process 2.7 million barrels a day of crude oil, some 16 percent of total U.S. refining capacity.
This upward momentum on prices cannot be halted by the administration without radical protectionist action that would destroy confidence in all the markets -- on the other hand Qaeda can continue to manipulate these prices north with the goal of weakening western economies.
Any opposition strike on oil facilities now would be a disaster. Such an event could indeed take oil to $100 before year's end.
J
Why are we not drilling in ANWAR again?
This is great!! I told the old-ball-and-chain that I couldn't mow the lawn again until gas prices come down so I can afford to fill up the old Toro. Beer me!
Next time a SUV or pickup tries to bully me on the road (e.g. on my ride home tonight, almost assuredly) I'll be chuckling with glee at their fuel efficiency.
We all listen to the news. These multiple stories about oil prices are becoming tiresome. Inflation adjusted, oil hit an all time in 1981, and we had lines at gas stations to boot. Move to Europe and see what they pay. I say gasoline is still cheap here in the US.
Because ANWR is a wilderness area that will have no impact on oil prices. The article is about refining capacity, not crude oil.
Same reason why we aren't doing new drilling off Florida and North Carolina and Texas and California. Politics.
Misleading headline abou it being a "record" in any meaningful sense. As the body of the article later admits, oil prices "would need to surpass $90 a barrel to exceed the inflation-adjusted peak set in 1980."
Am I a cynic if I say that the media wouldn't be headlining such "records, that aren't really records," if Clinton were in office?
up 15% this week. all these "refinery incidents", will there be gasoline shortages? I doubt it.
This issue is hurting Bush politically, he's detached from it, and its all people are talking about - these spiraling gas prices are in every american's face every day.
at least, Bush could use the bully pulplit to ask US corporations to liberalize telecommuting rules and go to a 4x10 hour work week - the fastest way to cut short term consumption is through a quick jolt of conservation.
then why is crude rising?
I keep hearing about "reduced refining capacity." But this has not been a problem for the past couple days. This has been going on for years!! What are the heavy hitters, Texaco, Exxon, etc. doing with all those profits they continue to rake in? Are new refineries being built, or is current refining capacity going to be "the status-quo?" I am guessing there may be something on this in George W.s recently passed energy bill. Anyone know?
The United States of America !!
E Pluribus Unum
Still not as Socialist as France !!
Buy a fuel efficient car, and you can make up the difference in the gasoline price increase.
As far as I know, crude is rising due to increased worldwide demand, China, india, etc etc. And I am led to believe that the estimated yield from ANWR would do very little at all to impact world crude supply vs. demand.
Yawn, heard the same in the late 70's and early 80's.
Sorry jihadi, but your dream ain't going to come true.
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