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Posted on 09/19/2005 3:41:44 AM PDT by RWR8189
SYDNEY (Reuters) - Oil prices climbed more than 1 percent on Monday as a new storm system appeared to be headed for the U.S. Gulf Coast, and as OPEC ministers appeared to favor leaving crude output unchanged for now.
U.S. light crude rose 78 cents to $63.78 a barrel as the season's 17th tropical storm formed near the Bahamas and OPEC members leaned toward taking no immediate action on extra supply.
London Brent crude jumped 93 cents to $62.74 a barrel.
Those gains helped prices rebound from a near $2 fall on Friday, which took oil to its lowest close in six weeks on mounting concerns that record costs are eroding demand growth.
Tropical Storm Rita, which is approaching the Florida Keys, could turn into a hurricane and move into the Gulf of Mexico region, U.S. forecasters said, threatening further disruption to a region only slowly recovering from Hurricane Katrina.
"While we continue to assess the damage from Katrina, the threat to production of new storms is attracting everybody's attention and could drive prices right back up," said Gerard Burg, minerals and energy economist at the National Bank of Australia.
The storm was also a reminder that the hurricane season extends through October, posing risks to efforts to restore more than half the Gulf's oil production and the four refineries still out of commission.
"This is really much more important than OPEC supply as their spare capacity is largely heavy and sour and the real shortage is capacity to upgrade such fuels anyway," Burg added.
OPEC INDECISION, DEMAND WORRY
OPEC begins a two-day meeting in Vienna on Monday and had been expected to raise output by 500,000, or 1 million barrels per day (bpd).
But most OPEC ministers now favor an option to leave output limits unchanged with a pledge to release crude from the cartel's 2 million bpd of spare capacity if required by market conditions, senior OPEC delegates said on Monday.
"Some members already accepted the proposal," said OPEC President Sheikh Ahmad al-Fahd al-Sabah, adding the cartel's decision was likely to come later on Monday.
OPEC ministers are treading a fine line between reassuring the markets that extra crude is available and advising caution about unnecessary supply, with representatives from Qatar, Libya and Nigeria explicit that it was not required given the shortfall in refining capacity.
Nearly 900,000 bpd of U.S. refining capacity could be out of commission for months due to Katrina, focusing the market's anxiety on supplies of driving and heating fuels, despite a global release of emergency government reserves.
Oil products led the market's gains on Monday, with gasoline climbing 2.4 percent to $1.8275 a gallon, while heating oil rose 1.8 percent to $1.8705 a gallon.
OPEC's dilemma comes as global demand shows signs of easing thanks to prolonged high energy prices. Both OPEC and the International Energy Agency have trimmed their forecasts for oil demand growth over the past week as consumers feel the pinch of prices, which have doubled in the past two years.
"It's been the demand side more than the supply side keeping this market as firm as it has been, so when you start to get some data showing questions on the demand side... it is going to take out some of that premium," ABN AMRO's John Brady said.
Tension over North Korea's nuclear program could ease after the country promised on Monday to give up its nuclear weapons in exchange for energy aid and security guarantees, though skeptics said the landmark agreement was more words than action.
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Let's hope that 2006 sees a far less busy hurricane season than 2005.
Next year... Honolulu...
Yep, get the extra cxash as fast as possible. Blame it all on hurricanes even though Katrina did no damage to underwater pipelines and the refineries were back on line in very short order.
The responsibilities of the companies to not gouge us is pretty thin. The dealers on the street at local stations are losing huge as their margins to sell gas is so thin that privately owned stations are going out of business rapidly. Hmmmmm, seems to leave only the corporate owned ones standing. Nice way to eliminate competition.
WHilst I do not want the government setting prices I have no problem with unfair business practices being looked into. Something is wrong when the prices go up almost 75 cents over night then the announcements is made that supplies have been re-establised yet they fall only half that and take weeks to do it.
What I would love is an instructional expose by some one here learned in the whole economy from ground to gas tank so that I can know whether or not I am off base here.
If oil dropped to a nickle a barrel one day and then the following day rose to a dime, Reuters report would scream OIL PRICES DOUBLE IN ONE DAY!!!
Oil prices are down from the $70+ that we have seen, but that would be good news. Reuters is more interested in the gloom and doom slant on the news as long as there is a Republican in the White House.
The market will decide the price of oil and hurricanes are a part of market forces.
Gasoline here (central Illinois) is at $2.66, that's down from a peak of $3.29
Once the severe cold & snow begins we could see 15.000. It is and shall be very $$$ to keep one's home warm.
Buy Now or prepare to be shafted!
And why haven't the lords of the "mainstream mess" kept us up on that bounty--just on federal land alone in those 3 states?
Tropical Storm Rita Moves Toward Florida; May Become Hurricane
That's about the size of it. Also Heating Oil & for those which use Propane as well, buy now.
I saw $2.56 when I swung through Bloomington-Normal yesterday.
We could really go for prices like that in Chicagoland!
The only way we can assure that will happen is if Bush signs Kyoto now!!
Mike
Kuwait offers to build first refinery in U.S. in 30 years
An OPEC foreign nation makes an offer to construct an oil refinery, in relation to homegrown Exxon, Sunoco, Citco, Texaco...etc...incredible!
Price at my neighbourhood Shell station dropped over the weekend from $1.03 to $.95 per litre. Still way higher than US prices, but down by about 75 cents since Labour Day Weekend.
Of course the Long Weekend Price Gouge is a Canadian tradition and nobody really gets excited about it anymore. Like de Toqueville put it so well about the Frenchman of the 1800s (and now), "He folds his arms and waits for the entire nation to come to his aid."
Exactly right- we use natural gas, and having restricted ourselves to heating only the kitchen and family room for the last few winters, we're looking at replacing the kitchen window AC with a heat pump, and maybe adding a couple of baseboard electric heaters.
By the de Toqueville quote, which has a lot of merit, I take you are in the PQ's Townships area? Some of the best Fall colour anywhere, but frigid in the winter.
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