Oil Prices Rise as Storm Threatens GoM

Friday, September 21, 2007
According to AFP, oil prices rose to new record highs on global markets as concerns about squeezed supplies were heightened by a storm threatening Gulf of Mexico installations. New York's main futures contract, light sweet crude for delivery in October, jumped 1.39 dollars to close at 83.32 dollars a barrel. The contract expired at the close.

In London, the price of Brent North Sea crude for November delivery added 62 cents to settle at $79.09 a barrel, after earlier hitting an all-time high of 79.28 dollars. The price of New York crude has hit a series of record peaks in recent days, including Wednesday after the US Department of Energy (DoE) said crude oil reserves had tumbled last week, underscoring global supply tightness. Further pressuring prices was a tropical storm building in the Gulf of Mexico. According to the US government agency Mineral Management Service, offshore oil and gas operators in the Gulf of Mexico have begun evacuating platforms and rigs in the path of the storm. The agency said roughly 28 percent of oil production had been shut down, accounting for about 360,000 barrels a day, as well as some 17 percent of gas production. Iran's representative to the Organization of the Petroleum Exporting Countries agreed that 100-dollar oil was possible, but did not say when. Reinforcing supply concerns, the DoE said on Wednesday that US crude inventories plunged by 3.8 million barrels to 318.8 million barrels in the week ending September 14. That marked the 10th consecutive weekly drop and was almost double analysts' consensus forecasts for a fall of about 2.0 million barrels.

US gasoline stockpiles rose by 400,000 barrels last week, confounding market expectations for a drop of 1.0 million. Distillates, which include diesel and heating fuel, advanced by 1.5 million barrels, which tallied with forecasts for a 1.23-million-barrel gain. Meanwhile's the Federal Reserve's decision Tuesday to cut key interest rates by a bigger-than-expected 50 basis points to ease tight credit that has been causing turmoil on global financial markets also perked up the oil market. Source: AFP

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