Nov. 5, 2004
Associated Press
Houston Chronicle
VIENNA, AUSTRIA - Oil prices edged up today but remained near two-month lows below $49 a barrel, reflecting increased refining capacity in the Gulf of Mexico. Still, analysts said higher demand during the Northern Hemisphere's winter could soon result in an upward spike.
Crude for December delivery was at $48.94 in electronic trading on the New York Mercantile Exchange at midday in Europe, up 12 cents from its overnight close. Light crude had fallen $2.06 to $48.82 on Thursday, the first time it has settled below $49 since Sept. 24.
Brent crude was trading at $46 in the International Petroleum Exchange's morning electronic session, down 1 cent.
Gulf of Mexico production has been recovering from its battering by Hurricane Ivan in mid-September, boosting U.S. crude supplies and helping prices fall by more than $6 since hitting a record $55.17 a barrel on Oct. 22 and Oct. 26.
"Crude inventories have been building in the United States and that is a result of production that was temporarily stopped due to Hurricane Ivan," said Victor Shum, an oil analyst in Singapore for Texas-based Purvin & Gertz. "When prices start to go one way or the other, there is a certain momentum,"
But Angus McPhail of ING Financial Markets in London said oil futures "may resume their upward climb as we move further into the heating season" and inventories deplete. He said prices could again rise above $50, reflecting tight demand.
Traders speculated what the re-election of U.S. President George W. Bush would mean for energy policy, with analysts saying he is likely to maintain a fossil-fuel friendly policy and bolster U.S. strategic reserves, already at 670 million barrels. McPhail said any such decision would also likely drive prices upward until spring in the Northern Hemisphere.
The U.S. Energy Department said this week that commercially available stocks of crude in the United States rose by 6.3 million barrels to 289.7 million barrels last week -- about 1 percent below year-ago levels.
Also easing pressure on oil prices was Thursday's Energy Department report that natural gas in storage had risen a larger-than-expected 44 billion cubic feet to 3.29 trillion cubic feet.
Markets appeared to largely ignore a seventh straight week of falls in distillates, which include heating oil, kerosene and jet fuel, which are down 12 percent from a year-ago in the United States and similar amounts in Western Europe and Japan.
By late morning today, heating oil stood at $1.3750 per gallon while natural gas stood at $8.220 per 1,000 cubic feet, both slightly higher.
With Palestinian leader Yasser Arafat in a coma in a Paris hospital, there were hopes of lessened Israeli-Palestinian tensions should a successor be named.
"Anything that gives the perception that things will improve in the Middle East will ease prices," said Fadel Gheit, an oil analyst at brokerage Oppenheimer & Co. in New York.
Still, other factors kept markets edgy -- among them the suspension in oil supply from northern Iraq after a key pipeline was attacked, a general strike planned for Nov. 16 in Nigeria to protest rising domestic fuel prices and continuing legal woes for Russian oil giant OAO Yukos.
http://www.reuters.com/newsArticle.jhtml?type=businessNews&storyID=6718514