THE NEW YORK TIMES: Oil Prices Nudge Back Above $49 a Barrel: “I think OPEC needs to take immediate action,” said Kazunori Yamamoto, senior crude oil general manager at Japan's Showa Shell Sekiyu K.K. (ShellNews.net) 27 Jan 05
Published: January 27, 2005
Filed at 5:55 a.m. ET
LONDON (Reuters) - Oil prices nudged back above $49 a barrel on Thursday as traders braced for potential disruptions ahead of Iraq's elections on Sunday or a possible surprise supply cut from OPEC ministers meeting the same day.
U.S. light crude (CLc1) was up 39 cents at $49.17 a barrel, recovering part of Wednesday's 86-cent fall after a bigger-than-expected build in U.S. crude inventories. London Brent crude was up 36 cents at $46.88 a barrel.
U.S. crude stocks last week climbed by 3.4 million barrels to stand 9 percent above a year ago, according to a government report on Wednesday.
Crude prices are up 13 percent for the year after winter finally hit hard in the U.S. Northeast, the biggest heating oil market in the world.
Heating oil inventories fell by 2.1 million barrels last week, keeping them 4 percent below year-ago levels as consumers and retailers stocked up ahead of the cold snap.
Winter supply worries are receding with temperatures in the frigid Northeast forecast to rise next week and stay warmer than usual in February and March.
Even so a host of OPEC ministers have said this week that oil near $50 a barrel is too high to justify cutting production when the cartel meets on Jan. 30, despite fears that prices could tumble when demand ebbs in the second quarter.
Some ministers have suggested that a decision to take more crude off the market could wait until the group's next meeting in mid-March, but analysts say that could be too late.
``I think OPEC needs to take immediate action,'' said Kazunori Yamamoto, senior crude oil general manager at Japan's Showa Shell Sekiyu K.K. ``If they decide to cut production in March, it will be too late.''
Saudi Arabia's oil minister Ali al-Naimi has declined to comment on his position this week and the memory of other recent surprise decisions by the cartel is keeping dealers nervous.
Naimi has already said the kingdom has cut production by 500,000 barrels per day (bpd) to 9 million bpd as part of OPEC's deal to withdraw 1 million bpd of supply from January 1.
Traders are anxious about Iraq's election, also on Sunday, as they fear intensifying violence could hit southern exports, which have been largely spared the repeated sabotage that has paralyzed northern flows for more than a month.
Wednesday was the deadliest day for American forces since they invaded the country 22 months ago as 31 troops died in a helicopter crash and six more were killed in insurgent attacks.
``It's too dangerous to say stability will return there anytime soon. It just means that you can't rely on Iraqi crude for a balanced market,'' said David Thurtell at Commonwealth Bank of Australia in Sydney.