Oil soars above $98 on dollar lows, winter fears
Oil prices surged above $98 a barrel on Wednesday, ploughing deeper into record territory as the dollar plumbed new lows and traders worried about a winter fuel crunch due to thinning oil stocks and a North Sea storm.
Investors bracing for more fallout from the US subprime mortgage crisis and seeking shelter from the sliding US dollar have driven oil nearly $30 higher since mid-August and lifted other commodities including gold, now at a 28-year high.
US light, sweet crude for December rose as much as $1.47 to a new record of $98.17 a barrel and was up $1.22 at $97.92 by 0804 GMT in active trade.
London Brent crude also hit a new peak of $94.74, and was later up $1.21 at $94.47 a barrel.
Signs of thinning global oil stocks ahead of peak winter oil demand have added fuel to the rally, aiding a nearly 8 percent rise over the past two weeks alone, and prompting many analysts to say it’s only a short matter of time before oil hits $100.
“We had the (North Sea) supply disruptions yesterday, the dollar is weaker, so we’re moving higher,” said Dariusz Kowalczyk, chief investment strategist at CFC Seymour.
The Norwegian unit of oil major BP will shut its 80,000 barrels per day (bpd) Valhall oilfield from Thursday night due to a storm in the North Sea, while ConocoPhillips may shut five of its 16 oil platforms on its 236,000 barrel per day (bpd) Ekofisk field.
Oil gains picked up momentum on Wednesday after the US dollar hit another low against the euro at $1.4666 with global credit market turmoil keeping expectations of another Federal Reserve rate cut alive. And weekly US inventory report due later on Wednesday is expected to show crude stocks in the world’s biggest energy consumer had fallen 900,000 barrels last week due to disruptions to Mexican exports, a Reuters poll found. S]
Although any bearish surprise there may trigger some profit-taking, Kowalczyk said $100 oil appeared inevitable.
“I think we’ll get there,” he said. “The factors that have been driving the recent trend are still in place.”
Japanese crude oil stocks rebounded from near a three-decade low, but stocks of kerosene -- used as a winter heating fuel -- are sharply below year-ago levels, data showed.
Investors bracing for more fallout from the US subprime mortgage crisis and seeking shelter from the sliding US dollar have driven oil nearly $30 higher since mid-August and lifted other commodities including gold, now at a 28-year high.
US light, sweet crude for December rose as much as $1.47 to a new record of $98.17 a barrel and was up $1.22 at $97.92 by 0804 GMT in active trade.
London Brent crude also hit a new peak of $94.74, and was later up $1.21 at $94.47 a barrel.
Signs of thinning global oil stocks ahead of peak winter oil demand have added fuel to the rally, aiding a nearly 8 percent rise over the past two weeks alone, and prompting many analysts to say it’s only a short matter of time before oil hits $100.
“We had the (North Sea) supply disruptions yesterday, the dollar is weaker, so we’re moving higher,” said Dariusz Kowalczyk, chief investment strategist at CFC Seymour.
The Norwegian unit of oil major BP will shut its 80,000 barrels per day (bpd) Valhall oilfield from Thursday night due to a storm in the North Sea, while ConocoPhillips may shut five of its 16 oil platforms on its 236,000 barrel per day (bpd) Ekofisk field.
Oil gains picked up momentum on Wednesday after the US dollar hit another low against the euro at $1.4666 with global credit market turmoil keeping expectations of another Federal Reserve rate cut alive. And weekly US inventory report due later on Wednesday is expected to show crude stocks in the world’s biggest energy consumer had fallen 900,000 barrels last week due to disruptions to Mexican exports, a Reuters poll found. S]
Although any bearish surprise there may trigger some profit-taking, Kowalczyk said $100 oil appeared inevitable.
“I think we’ll get there,” he said. “The factors that have been driving the recent trend are still in place.”
Japanese crude oil stocks rebounded from near a three-decade low, but stocks of kerosene -- used as a winter heating fuel -- are sharply below year-ago levels, data showed.
Winter risk
The US Energy Information Administration (EIA) flagged the risk to winter supply on Tuesday, saying stocks in industrialised nations would drop some 20 million barrels below the five-year average by the end of this year amid robust demand and continued caps on output from producer-group OPEC.
The EIA, the statistical wing of the Department of Energy, also sharply raised its forecast for US oil prices in 2008 to near $80 a barrel from its prior projection of $73.50.
The Organization of the Petroleum Exporting countries, source of more than a third of the world’s oil, has agreed to raise production by 500,000 bpd from Nov. 1 and shrugged off calls to expand on that, blaming the rally on speculators and politics.
Analysts have said that big options positions in the $90 to $100 range may also be forcing investors to cover short positions, contributing to the rise toward an all-time inflation-adjusted high of $101.70 during April 1980.
“We see a number of speculative and technical factors as critical drivers of the latest oil price rally,” UBS oil analyst Jan Stuart said in a note.
The road to $100 has grown increasingly bumpy, however. Over the previous seven sessions, oil prices have followed each sharp one-day gain with a $1 or more fall. (Reuters)
No comments:
Post a Comment