Oil soars to fresh nine-year highs

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Wednesday March 1, 3:28 pm Eastern Time (Note: this article is ``in progress''; there will likely be an update soon.)

NYMEX oil ends at new 9-yr high as gasoline surges

NEW YORK, March 1 (Reuters) - Crude oil futures on the New York Mercantile Exchange (NYMEX) soared to fresh nine-year highs near the close Wednesday, supported by bullish gasoline futures and as the latest weekly data showed U.S. oil supplies remained at low levels, traders said.

After striking another fresh post Gulf War high high of $31.80 a barrel, a whopping gain of $1.37 a barrel, April crude firmed at just a few cents below that peak. At the close, it last traded at $31.70, up $1.27.

Those prices are the highest since Jan. 16, 1991, when NYMEX crude rose to $32.75.

April gasoline futures, on their first day as front month contract, continued to nudge near $1.00 a gallon and set yet another fresh contract high of 99.50 cents a gallon, up 5.50 cents. It last traded at 99.35 cents, up 5.35 cents, the highest price since October 1990 when it hit $1.00 in the market rally after Iraq invaded Kuwait in August that year.

April heating oil moved at gasoline's behest, posting a fresh contract high of 79.95 cents a gallon, up 3.50 cents. It last traded at 79.40 cents, up 2.95 cents.

In London, April Brent crude on the International Petroleum Exchange last traded at $29.06 a barrel, up 97 cents, setting another post Gulf War high.

News that Saudi Arabia, Venezuela and Mexico, the chief architects of producers' output cuts, would propose an increase in production of 1.2 million barrels per day (bpd) beginning April did not dampen buying interest, traders said.

The proposed increase, if it materializes, would be too small to balance the extremely tight market, they said.

For the U.S., the extra barrels may come too late for refiners to ramp up production in time to meet gasoline demand during the onset of the summer driving season, which traditionally starts in the last week of May during the Memorial Day holiday, they added.

http://biz.yahoo.com/rf/000301/8h.html

-- Martin Thompson (mthom1927@aol.com), March 01, 2000

Answers

This is an update article. NEW YORK, (Reuters) - The price of prompt crude oil futures on the New York Mercantile Exchange (NYMEX) jumped to a new post-Gulf War high of over $31 a barrel Wednesday as traders eye perilously low U.S. gasoline inventories with alarm. Already low gasoline stocks slipped another notch in last week's inventory statistics at a time when they should be building ahead of the heavy seasonal demand of the summer.

"We've got a situation where we can't afford any draw in gasoline. A draw in gasoline this time of year is unusual ahead of the summer driving season," said A.G. Edwards analyst Bill O'Grady in St. Louis, Mo.

Even news from London that Saudi Arabia, Venezuela, and Mexico, the three main architects of the current supply restriction agreement, are set to propose a 1.2 million barrel per day production increase by members of OPEC beginning April 1 wasn't enough to bulk up dwindling global crude supplies wasn't enough to quell the rally.

"It's too little too late," said Tom Bentz, analyst and trade at Paribas Futures Inc. in New York.

U.S. prices are also being propelled by problems with the gasoline- making components of two refineries which will also exacerbate stock shortages.

The Hovensa refinery, a joint venture between state-owned Petroleos de Venezuela (PDVSA) and Amerada Hess Corp. and the largest in the Western Hemisphere, is on reduced capacity after a emergency shutdown while a fire at BP Amoco's Whiting, Indiana plant shut down a unit there.

http://abcnews.go.com/wire/World/reuters20000301_2028.html

-- Martin Thompson (mthom1927@aol.com), March 01, 2000.


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