Posted on 09/27/2005 12:38:39 AM PDT by M. Espinola
SINGAPORE (AFX) - Oil prices were higher in early afternoon trade here on fresh concerns that US refineries, battered by Hurricanes Rita and Katrina, will not be able to meet demand in the near term, dealers said.
At 12:50 pm (0450 GMT), New York's main contract, light sweet crude for delivery in November was up five cents at 65.87 usd a barrel after closing at 65.82 usd in the United States yesterday.
During the morning session here the contract touched a high of 66.17 usd.
Concerns are mounting that US refineries, already struggling to quench the thirst of the world's biggest energy user before Hurricanes Rita and Katrina struck, will find it difficult to produce enough heating oil with the winter season fast approaching, dealers said.
'Supplies of heating oil are very low compared to other supplies of energy commodities,' said Dariusz Kowalczyk, a Hong Kong-based investment strategist with CFC Seymour Securities.
'As we near the heating (winter) season, it will exacerbate the problem,' he said of the disruptions caused by Rita and Katrina to US refinery operations.
Dealers said comments by President George W. Bush that he was willing to tap the Strategic Petroleum Reserve if needed gave little comfort to the market.
'The more President Bush talks about releasing strategic reserves, the more we understand that we've got no more production to give,' said Fadel Gheit, an oil analyst with Oppenheimer and Co.
He said the problem 'is not in crude oil' but in (the lack of) refining capacity.
The scale of the problem was underlined yesterday with new US government figures showing that crude production in the Gulf of Mexico remains completely shut down, while more than 78 pct of natural gas output is offline.
Gulf energy output had only just been recovering from Hurricane Katrina at the end of August when Rita swept through, forcing the evacuation of hundreds of platforms and rigs.
'It's premature to say everything is clear,' PFC energy analyst Seth Kleinman said after Rita roared ashore near the Louisiana-Texas border over the weekend.
Rita hit a 'tight market' already struggling to recover from Katrina,' he said.
A total of 859 rigs and platforms in the Gulf are unmanned after being evacuated last week before Rita swept through, US government figures showed Monday.
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Heating oil and natural gas are high in price, and likely to remain so through to early next year.
Lets hope some of that much vaunted global warming kicks in.
But someone in the US, who lives in Washinton state, said that the rabbits have all put on their fur, which shows it will be a cold winter. Wait and see, I guess.
Global warming for the Northeast usually ends around mid-October, with Indian Summer sometimes extending the season. Springtime global warming does not begin again until late April, early May, but there remains a risk of a late snow storm. :)
Of the 7.7 million households in the United States that use heating oil to heat their homes, 5.3 million households or roughly 69 percent reside in the Northeast region of the country - making this area especially vulnerable to fuel oil disruptions.The Northeast Home Heating Oil Reserve has 2 million barrels of emergency fuel stocks stored at commercial tank farms.
If refining is a problem, then the supply of crude is higher than our capability to refine it. Thusly, would not the price of crude drop? Everytime I read an article on the justification for robbery on consumer use of petrol products, I read, it simply boils down to supply vs demand. Now I am just confused on why the price of crude rose, when we have ample supply from the SPR, Kuwait,and elsewhere. There will be a democrat CIC in '08 if this absurdness doesn't stop.
Not to mention the rising costs of goods and inflation... meanwhile big oil is in big green.
Climate of 2004/2005 Northern Hemisphere Winter Season: Snow and Ice
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