Oil
Rides On All Time Highs
By Jonathan Leff
12 October, 2004
Reuters
SINGAPORE -
Oil prices held near historic highs over $53 a barrel on Tuesday, with
global supplies hounded by outages that were thwarting efforts to build
U.S. heating oil inventories ahead of the winter.
U.S. light, sweet
crude oil futures were trading up 10 cents at $53.74 a barrel, having
hit a record high $53.80 on Monday, the fifth successive day of all-time
peaks.
In London, Brent
crude was down 11 cents at $50.55 a barrel after crossing the $50 line
for the first time on Monday.
Oil prices have
soared 65 percent this year as the strongest demand growth in over two
decades caught major producers by surprise, leaving a tightly stretched
global supply system little leeway to deal with unexpected outages.
Despite relative
stability in Iraq, which had rattled markets over the summer, production
impediments continued to haunt the market, with U.S. Gulf oilfields
still reeling from last month's hurricane and Nigeria and Norway grappling
with labor disputes.
Oil traders will
now scrutinize the next batch of weekly U.S. inventory data to see whether
heating oil supplies narrow their 6 percent deficit versus last year,
despite these supply problems. The data are due out at 1430 GMT on Thursday.
Distillate stockpiles
were expected to fall an average 1.0 million barrels, a Reuters poll
of seven analysts showed, with demand improving as autumn weather hits
the U.S. Northeast, the biggest regional consumer of heating oil.
"The fear is
that there will not be enough heating oil and we are already seeing
colder weather in the Northeast," said John Brady, a New York-based
broker with ABN AMRO. "If we get another fall in stocks, it will
put further strain on prices."
Winter fuel is in
short supply around the globe, with European distillate stocks 3.4 percent
below last year and kerosene supplies in Japan down 20 percent from
2003.
The forecast for
U.S. inventories also called for a rise of 1.3 million barrels in crude
stocks for the week ended Oct. 8, the third week of gains. Tanks were
4.4 percent below 2003 in last week's Energy Information Administration
figures.
The usual pre-winter
stockbuild has been thwarted by the effects of Hurricane Ivan, with
around 475,000 bpd of U.S. Gulf production still out of commission a
month after the storm hit. Two-thirds of that is expected to be shut
in past the end of this month, the Minerals Management Service said
last week.
Another 25,000 bpd
of production is expected to be cut in Norway as a rig workers strike
there widens on Tuesday, forcing the world's third-largest exporter
to shut in a total 55,000 bpd.
OPEC member Nigeria,
which pumps around 3 percent of the world's oil, has managed to keep
exports steady despite a series of threats this month, including the
on-going general strike over fuel prices that is due to continue until
Friday.
The strike brought
most Nigerian cities to a standstill on Monday and closed many industries,
but has not hurt oil exports.
Other financial
markets are increasingly taking their queues from oil prices, which
threaten to put a damper on economic growth and add a tax-like burden
to companies and consumers.
In Japan, the world's
third-biggest energy user, the main Nikkei stock market index fell more
than one percent on Tuesday due to oil's continued strength, traders
said.
Finance Minister
Sadakazu Tanigaki said Japan's economy had grown more resilient to higher
prices but that other countries might not be able to deal with rising
costs as effectively.