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 Business News | September 2007 
Oil Prices Hit Record Highs as Storm Threatens Gulf of Mexico
 Agence France-Presse
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 |  | We have the usual mix of factors - weather, geopolitics and current tightness in supply supporting prices.
- Victor Shum, Purvin & Gertz |  | |
New York - Oil prices powered to new record highs on global markets Thursday, as concerns about squeezed supplies were heightened by a storm threatening Gulf of Mexico installations.
New York's main futures contract, light sweet crude for delivery in October, jumped 1.39 dollars to close at 83.32 dollars a barrel. The contract expired at the close.
In London, the price of Brent North Sea crude for November delivery added 62 cents to settle at 79.09 dollars a barrel, after earlier hitting an all-time high of 79.28 dollars.
The price of New York crude has hit a series of record peaks in recent days, including Wednesday after the US Department of Energy (DoE) said crude oil reserves had tumbled last week, underscoring global supply tightness.
"The data reinforce concerns that, even if a slowdown in the US economy trimmed domestic oil demand growth, supply constraints both upstream and downstream might extend the recent tightening of (the oil market)," Fimat analyst Antoine Halff said.
Further pressuring prices was a tropical storm building in the Gulf of Mexico. According to the US government agency Mineral Management Service, offshore oil and gas operators in the Gulf of Mexico have begun evacuating platforms and rigs in the path of the storm.
The agency said roughly 28 percent of oil production had been shut down, accounting for about 360,000 barrels a day, as well as some 17 percent of gas production.
Iran's representative to the Organization of the Petroleum Exporting Countries agreed that 100-dollar oil was possible, but did not say when.
"Yes, any outcome is possible. If the explosions in Mexico continue and there is severe cold and if some nations in OPEC experience turbulent political conditions and a lot of other issues can make the oil prices go even higher," Hossein Kazempour Ardebili told Iranian radio.
Reinforcing supply concerns, the DoE said on Wednesday that US crude inventories plunged by 3.8 million barrels to 318.8 million barrels in the week ending September 14.
That marked the 10th consecutive weekly drop and was almost double analysts' consensus forecasts for a fall of about 2.0 million barrels.
US gasoline stockpiles rose by 400,000 barrels last week, confounding market expectations for a drop of 1.0 million.
Distillates, which include diesel and heating fuel, advanced by 1.5 million barrels, which tallied with forecasts for a 1.23-million-barrel gain.
"We have the usual mix of factors - weather, geopolitics and current tightness in supply supporting prices," said Victor Shum, a Singapore-based analyst with energy consultancy Purvin and Gertz.
"In the near term, there is limited downside risks to the oil market. We've got really strong oil market fundamentals and many investors have returned to the market because of these fundamentals."
Meanwhile's the Federal Reserve's decision Tuesday to cut key interest rates by a bigger-than-expected 50 basis points to ease tight credit that has been causing turmoil on global financial markets also perked up the oil market.
"The feeling is that if US economic growth remains healthy, oil demand will also remain good," Shum said. |
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