YahooNews: Crude Oil Hugs Milestone $55 Mark: "...the main reason traders have been captivated by recent events such as: The just-concluded oil workers' strike and threats of rebel attacks in Nigeria, Africa's largest producer.: Sporadic attacks by militants on Iraqi pipelines.: Unrest in Saudi Arabia, the world's largest producer, where extremists have vowed to clear out foreigners who run the production facilities there.: The on-again, off-again tax battle between the Russian government and oil giant Yukos.: Political tensions in key OPEC producer Venezuela." (ShellNews.net)
By YEOH EN-LAI, Associated Press Writer
Fri Oct 15
SINGAPORE - Crude oil futures stayed within range of the $55 milestone Friday, a day after a decline in the U.S. inventory of heating oil roiled a market already on edge over tight supplies, high demand and unrest among key producers.
Oil for November delivery was at $54.82 late afternoon Friday in Asia — up six cents from its record settlement price and slightly off its all-time high of $54.88 on the New York Mercantile Exchange. In New York Thursday, a fourth straight week of falls in U.S. distillate stocks just before the Northern Hemisphere winter pushed crude up $1.12, or 2.1 percent — its eighth record high in two weeks.
In London, Brent crude for December was lower at $49.99 on the International Petroleum Exchange from its record close of $50.84 overnight.
Commercially available supplies of heating oil declined by 1.2 million barrels for the week ending Oct. 8, falling to 50.0 million barrels, or 10 percent below year ago levels, the Energy Department said in its weekly petroleum supply report.
"It's all a run towards the winter season, it's all heating oil driven," said Esa Ramasamy, oil editorial manager for energy reporting agency Platts. "Stock levels in the Northern Hemisphere (are) low for diesel, which is what heating oil is all about."
Ramasamy said diesel and kerosene are used for heating oil, and the demand is even greater because airline usage of jet fuel — kerosene with additives — increases in winter.
"Air travel also peaks in winter. So you have jet fuel and heating demand — two markets competing for the same commodity which means there is increasing demand pressure," he said.
Jet fuel costs around $64 per barrel currently.
Crude futures have climbed about $10 the last month alone, in large part because of the slow recovery of oil production in the Gulf of Mexico following Hurricane Ivan.
Nearly 20 million barrels of oil have been shut in since Ivan hit the Gulf of Mexico mid-September and daily oil production in the region remains 28 percent, or 471,000 barrels, below normal, the U.S. federal Minerals Management Service said on its Web site.
While oil prices are more than 70 percent higher than a year ago, they are still around $25 below the peak inflation-adjusted price reached in 1981.
One major concern for the market, analysts say, is that the world's excess production capacity — the amount of immediate surplus supply — is about 1 percent of daily demand, now estimated to be above 82 million barrels.
If so, in the event of an extended production outage, the thin supply cushion would be inadequate and this is the main reason traders have been captivated by recent events such as:
*The just-concluded oil workers' strike and threats of rebel attacks in Nigeria, Africa's largest producer.
*Sporadic attacks by militants on Iraqi pipelines.
*Unrest in Saudi Arabia, the world's largest producer, where extremists have vowed to clear out foreigners who run the production facilities there.
*The on-again, off-again tax battle between the Russian government and oil giant Yukos.
*Political tensions in key OPEC producer Venezuela.
Elsewhere, Australian flag-carrier Qantas Airways raised its fares Friday — its third fuel surcharge since May — in response to rising jet fuel costs. Passengers flying Qantas will now pay up to $21 more for an international flight.
"The hedging we have in place and the higher fuel surcharge will not cover all of the increased cost of jet fuel," said Qantas chief financial officer Peter Gregg.
In other developments, Japan's Federation of Electric Power Companies said utilities companies across the nation will burn less crude and fuel oil at thermal power plants in months ahead because of the fuel spikes and instead rely on nuclear energy.