Oil flirts with record highs
Pastor Dale Morgan
Oil flirts with record highs*
August 01, 2007 06:11am
Article from: Agence France-Presse
OIL prices pushed toward record levels overnight and hit an all-time
closing high in New York today as traders bet on declines in US energy
reserves that could further strain supplies.
New York's main futures contract, light sweet crude for delivery in
September, ended at $US78.21, its highest close ever and up $US1.31 from
yesterday.
The price rose as high as $US78.24, just shy of its all-time record of
$US78.40 hit July 13, 2006.
In London, the price of Brent North Sea crude for September delivery
added $US1.31 to settle at $US77.05 per barrel, nearing its August 2006
record high of $US78.64.
Traders were on tenterhooks ahead of tomorrow's crucial weekly
inventories report from the US Department of Energy, which is widely
expected to flag another decline in American crude reserves.
The analysts' consensus forecast is for a decline of 1.13 million
barrels of crude, following a drop of 1.1 million barrels announced last
week.
"If we see another draw in crude stocks as expected, and especially if
there is a drop in stocks at (key US storage terminal) Cushing, it will
push New York crude higher," said Sucden analyst Michael Davies.
Mike Fitzpatrick at Man Financial said traders are still bullish on oil,
shrugging off the likelihood of an economic slowdown that crimps demand.
"Investment money continues to flow into the energy market on the
outlook for global oil supplies to tighten and calmer conditions in
financial markets overnight seem to have eased concerns for demand
destruction in the energy sector," he said.
Last week, prices rallied after the US government revealed that crude
inventories had fallen by 1.1 million barrels, prompting renewed concern
about supplies.
Crude futures had dipped yesterday as traders cashed in profits after
New York crude surged close to a record close last Saturday, traders said.
But prices were underpinned overnight by suggestions that OPEC will not
increase production of crude oil at its meeting next month, they said.
The oil producers' grouping had indicated last week that it might
increase output in the fourth quarter.
However, Iranian media reported that Oil Minister Kazem Vaziri-Hamaneh
said yesterday the Islamic Republic did not support higher oil
production among OPEC member states.
Iran is the second-largest producer in the 11-member cartel, after Saudi
Arabia.
"Comments from Iran that the next OPEC meeting agenda will not include
changes in output serve to lend a bullish tone to the market, and the
expectations of a further attempt on the record levels remain high,"
said Bank of Ireland analyst Paul Harris.
Organisations such as the International Energy Agency have repeatedly
called on OPEC to boost production of crude oil to meet voracious demand.
But the cartel has refused to do so, saying any shortage of petrol and
other refined products is due to a lack of refining capacity, not of crude.