Posted on 08/24/2005 12:20:11 PM PDT by Jomini
Oil prices rose slightly Wednesday after the release of a U.S. supply report that showed shrinking gasoline stocks and rising inventories of crude oil and distillate fuel.
Traders were also watching an approaching storm that could enter the Gulf of Mexico later this week.
Crude oil for October delivery rose 34 cents to $66.05 a barrel in morning trade on the New York Mercantile Exchange. The front-month contract is nearly 50 percent higher than a year ago and hit an all-time high of $67.10 on Aug. 12.
In its weekly petroleum supply report, the Energy Department said domestic inventories of gasoline fell by 3.2 million barrels last week to 194.9 million barrels, or 7 percent below year ago levels.
U.S. supplies of crude oil grew by 1.8 million barrels to 322.9 million barrels, or 13 percent above year ago levels, the agency said. The supply of distillate fuel, which includes heating oil and diesel, increased by 1.4 million barrels to 132.5 million barrels, or 4 percent above last year's level.
On London's International Petroleum Exchange, October Brent crude futures rose 56 cents to $65.21 a barrel.
Nymex heating oil gained 1.5 cents to $1.8340 a gallon while gasoline rose nearly 2 cents to $1.8750 a gallon.
With the summer driving season drawing to an end, market focus is expected to shift to heating oil as demand for this product usually peaks in the winter.
Stoking bullish sentiment was Tropical Storm Katrina, which formed Wednesday morning in the Bahamas and could reach hurricane strength before hitting the coast of Florida later this week. The National Hurricane Center said the storm is expected to cross the state and head into the Gulf of Mexico, dropping a foot or more of rain.
Oil companies have shut down facilities in the Gulf as precaution against storm damage.
Ken Hasegawa, commodities broker at Tokyo-based Himawari CX, said " the emergence of the new storm is supporting gains."
But other analysts said the storm worries may be overblown.
"As with most storms, we think the fear factor is exceeding the likely impact on production here," said Timothy Evans, senior energy analyst at IFR Energy Services in New York.
The market has also been rattled lately by production outages in Ecuador, due to worker unrest, and in Iraq, where insurgents shut down most of the country's electricity grid on Monday.
"The markets are focused on event risk, and the fact that any small disruption in production, due to the thinness of refinery capacity, could lead to a short-term hiccup," said Joe Duarte, a Dallas-based independent energy analyst. "The market is clearly in a different zone now, being driven by momentum more than fundamentals."
Iraqi exports have since begun returning to normal, and the situation in Ecuador also has stabilized even amid building tensions over U.S. religious broadcaster Pat Robertson's suggestion that Venezuelan President Hugo Chavez be assassinated.
Washington has distanced itself from Robertson's comments.
Venezuela is the world's fifth-largest crude exporter and has the largest proven reserves outside of the Middle East. Chavez is an outspoken critic of President Bush and has irritated U.S. officials with his fiery rhetoric against American "imperialism" while moving closer to Washington's enemies Cuba and Iran.
An interesting match up of style and theory as Howard Cosell used to say.
J
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Maybe building more refineries over the last 30 years when none were built would have helped?
bttt
LIBS: "Building refineries will increase the green house gasses and we'll all be dead. Also, we would lose the power to control people's thoughts and actions..."
Refineries would help, but color me stupid since I can't understand how high oil reserves and low gasoline reserves = higher oil prices.
If we have building inventories of crude oil, why is the price per barrel going up. I could see since there aren't enough refineries that the price of gasoline would go up, but why the crude oil.
DIMS: "The religious right is stopping minorities, women and children from being able to get to work and school resulting in their firings, layoffs and poor grades. The soup lines are getting longer and longer. This is BUSH's FAULT!"
Refineries would help, but color me stupid since I can't understand how high oil reserves and low gasoline reserves = higher oil prices.
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This is what I was thinking. Smells like another rush of irresponsible speculation not based on supply and demand. Oh wait, another hurricane is coming, lets jump prices another $5.00 a barrel (just another excuse).
Someone has to reign in this baloney.
Ten years to get the EPA to approve new ones (which they wont do of course)...
Five years or so after that to get one on-line?...
Somebody should shoot any and all Middle Eastern and Central American Islamofascists & commie dictators attacking the USA with economic as well as other forms of terrorism.
Lets stop this economic war on the USA now....before it is too late
imo
"The markets are focused on event risk, and the fact that any small disruption in production, due to the thinness of refinery capacity, could lead to a short-term hiccup," said Joe Duarte, a Dallas-based independent energy analyst. "The market is clearly in a different zone now, being driven by momentum more than fundamentals."
Seems like the oil traders are all worry worts...
As long as we pay tribute to the arabs, via higher and higher oil prices, as long as we continue to pickup the tab for their war against us, we need not worry, for why would the muslim hordes want to kill the goose that lays the golden egg?
Jake
SCHUMER: "Why doesn't BUSH help the working families of America and open up the Strategic Oil Reserve? We clearly don't have enough crude oil..."
All of the Oil traders must be listening to the doom and gloom Envirofacists screaming about the number of hurricanes that will hit the US because of "global warming"
Paid $2.52 per gal today north of Cincinnati Ohio. Most I ever paid for gasoline in my life. It'll be 3.00/gal by Labor Day weekend.
Neil Cavuto said that this weeks gas supplies had risen. Me thinks this article is BS!!!
LLS
I had the same thought you did... For some reason prices for crude increase, as inventories of crude increase, because supply for gasoline is outstripping the ability to refine it.
It sounds more like a bunch of speculators are pushing up the price of gas every time there is bad news, without any real logic to their actions.
"While the American military crushes opposition around the world, Qaeda continues to concentrate strength on the Western oil jugular. One fights a 20th century battle ("the last war") focused on killing humans while the other initiates a 21st century style engagement ("postmodern Sherman") designed to collapse economic infrastructure.
An interesting match up of style and theory as Howard Cosell used to say."
What a great point you just made. A security/terrorism premium of $10 was already factored in a couple of years ago when the price started to climb. It really isn't fear of a shut down of oil or a hurricane coming that is keeping prices up, it is pure greed by speculators who now control the market along with major supplyers who are threatening an "embargo" such as Iran.
All I know is my (liberal as a nutjob) girlfriend is convinced that if we pull out of Iraq gas will magically drop to $1.07/gallon...
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