Oil prices approaching $65 a barrel
http://www.washingtonpost.com/wp-dyn...800157_pf.html
By BRAD FOSS
The Associated Press
Tuesday, August 9, 2005; 1:55 AM
WASHINGTON -- Oil prices jumped to a new high above $64 a barrel in Asian trading Tuesday, reflecting the market's persistent uneasiness about strong demand, tight supplies and a slew of threats to output around the globe.
Traders pinned the latest rally on security concerns in Saudi Arabia, refinery snags in the United States and the continued rise of gasoline consumption in spite of soaring pump prices.
The average nationwide price for regular unleaded gasoline jumped almost 8 cents last week to $2.37 a gallon, or 49 cents above last year, the Department of Energy said late Monday Still, government data show that gasoline consumption is up almost 1 percent at 9.1 million barrels a day through July, compared with last year.
Oil analyst Marshall Steeves at New York-based brokerage Refco Group Inc. said oil and gasoline prices were likely to keep rising until there were signs of a significant dropoff in demand, or a sharp slowdown in economic growth. "We're clearly not there yet," he said.
Light, sweet crude for September delivery rose as high as $63.99 a barrel on the New York Mercantile Exchange. The contract settled $1.63 higher at $63.94 _ the peak close since Nymex trading began in 1983.
The previous closing high was $62.31, set Friday.
But on Tuesday, oil prices pressed their gains, above $64. Midmorning in Singapore, crude on the New York Mercantile Exchange reached a high of $64.27 a barrel in Asian electronic trading before slipping to $64.06, up 12 cents.
"The market clearly has the jitters," said Deborah White, energy analyst at SG Securities in Paris.
Broadly speaking, those jitters are tied to worldwide consumption, which is expected to average more than 84 million barrels a day in 2005, leaving only about 1.5 million barrels a day of spare production capacity that could be called upon in an emergency to offset a prolonged supply disruption.
Given such a slim margin for error in the supply chain, a large premium has been priced into every barrel of oil sold on futures markets. This premium takes into account the possibility of production outages stemming from hurricanes, terrorism and labor strife around the globe.
Several factors put the market on edge Monday:
_ The U.S. Embassy and consulates in Saudi Arabia were closed after authorities announced Sunday a security threat against U.S. government buildings inside the world's largest petroleum-producing country.
_ Iran, OPEC's second biggest player behind Saudi Arabia, resumed uranium conversion activities at its Isfahan nuclear facility Monday, a step that Europeans and the United States have warned would prompt them to seek U.N. sanctions against the Tehran regime.
_ A fire broke out at a Sunoco Inc.'s refinery in Philadelphia over the weekend. This followed a string of refinery fires and other snags over the past two weeks that have not severely diminished supply, but have nonetheless made oil traders nervous. "The fear factor is alive and well," said oil analyst Jim Burkhard of Cambridge Energy Research Associates.
_ Suspected rebels launched renewed attacks overnight on pipelines in eastern India, leaving oil operations in the remote region in critical shape, a top oil official said Monday.
The market has also kept a close eye on tropical storms in the Gulf of Mexico, fearing a repeat of last year's Hurricane Ivan, which damaged oil facilities and caused output in the region to drop for several months.
Oil broker Tom Bentz of New York-based BNP Paribas Commodity Futures said there was no single event on which Monday's rally could be attributed. "We've just got a continuation of the uptrend here," he said. "And there's no sign that it will be stopping anytime soon."
In other Nymex trading, gasoline futures gained 2.48 cents to $1.857 a gallon while heating oil rose 5.82 cents to $1.7894 a gallon.
September Brent crude futures on London's International Petroleum Exchange gained $1.63 to settle at $62.70 a barrel.
While oil prices are about 40 percent higher than a year ago, they are still below the inflation-adjusted peak set in 1981.
___
Associated Press writers Edith Balazs in Budapest, Hungary, and Gillian Wong in Singapore contributed to this report.
Re: Oil prices approaching $65 a barrel
And gas prices jumped $.26 in one day!! (From 2.23 to 2.49) :angry:
Re: Oil prices approaching $65 a barrel
I got a taste of what the future might bring recently.
We were on vacation in Destin FL about a week after Hurricane Dennis hit nearby. About 100 miles outside of the Pensacola/Destin areas, they had signs on the interstate saying gas was scarce further in and to fill up now (which we did). Evidently the evacuation of the area had emptied most stations and they were having a hard time catching up.
After being in Destin for a few days, I went to get gas. Most of the major refueling stations like Shell, BP, etc. had none (they put plastic shopping bags over the pump nozzles). After talking to a guy at the condo, he said there was a little station nearby that had gas.
There was a line of about 20 cars waiting to get gas. There were many panicky people that were runnig on fumes and desperate to get gas. I witnessed about 3 separate confrontations about where in line you were that featured big-time temper flares and much X-rated swearing. Some of it was racial. There were a couple times where I thought there was going to be gun-fire. To say it was ugly was the understatement of the year.
I had the distinctly uneasy feeling I was catching a glimpse of the future.
Re: Oil prices approaching $65 a barrel
Well, you gotta feel for the poor oil companies though. I mean, Exxon/Mobil only made $7.6 billion in profits--PROFITS--last quarter. How are you supposed to live on that?
I'm also thankful that Bush's recent energy policy will do so much to negate the rising price of gas and...er, well, never mind.
Glad I ride the subway!
Re: Oil prices approaching $65 a barrel
Quote:
Originally Posted by Roy Tucker
I had the distinctly uneasy feeling I was catching a glimpse of the future.
http://www.azimut2001.com/images/sfo.../mad_max_2.jpg
Re: Oil prices approaching $65 a barrel
The juice...the precious juice...
Re: Oil prices approaching $65 a barrel
Re: Oil prices approaching $65 a barrel
time to ramp up the ethanol......
Re: Oil prices approaching $65 a barrel
Quote:
Originally Posted by Sham
Yeah... but I forgot the question.
Re: Oil prices approaching $65 a barrel
You almost have to feel sorry for China. The country is starting to industralize, but with oil prices going up and up, and the big focus on alternative fuels, you wonder if just as they finally get themselves into gear the world will have turned away from fossil fuels, leaving them with all this (relatively) brand new, utterly worthless, oil/coal-fueled machinery.
One also has to wonder if the rising demand of oil throughout the world wouldn't be so acute if it weren't for the Free Trade Agreements...
Re: Oil prices approaching $65 a barrel
Quote:
Originally Posted by zombie-a-go-go
One also has to wonder if the rising demand of oil throughout the world wouldn't be so acute if it weren't for the Free Trade Agreements...
Please explain your comment vis a vie FTAs.
Rem
Re: Oil prices approaching $65 a barrel
Quote:
Originally Posted by registerthis
I'm also thankful that Bush's recent energy policy will do so much to negate the rising price of gas and...er, well, never mind.
There is very little, if anything, that can be done about gasoline prices in the short term. The biggest problem with the energy bill is that it still doesn't allow drilling in the arctic.
Additionally, refinery capacity is needed to refine more oil into gasoline but it's been years since a new refinery was built in the US. A lot of NIMBY going on there----by a lot of people that clamor for more gasoline.
Rem
Re: Oil prices approaching $65 a barrel
Oil/Gas it's all going to go up. No way around it. Yes, we need alternative sources of energy fast, but that's not going to happen while oil and gas is still reality cheap. We'll get alternative sources of enegy, but I hope America leads the way and fast.
Re: Oil prices approaching $65 a barrel
Correct, RBA. The way out of this mess is to take a long-term approach and be willing/resigned to forking out more money while those approaches (hopefully) come to fruition.
Rem
Re: Oil prices approaching $65 a barrel
Quote:
Originally Posted by remdog
Please explain your comment vis a vie FTAs.
Rem
Okay, and this is just a random query, nothing I've given much thought to (which will rapidly become apparent as you read this :laugh: );
Through free trade agreements, the USA has made it more profitable for companies (noth foreign and at home) to produce goods in other countries for import to the USA. If there is an increase in production out in these other countries, particularly "Third-Worlders" (Cambodia? Taiwan?), you have to create infrastructure to support it. That means industrialization... greater industrialization means greater reliance on oil. Which means these other countries are taking oil supplies that were once surplus when the USA was the real "superpower consumer" of the black gold.
Greater demand = higher prices. So if our FTAs contributed to the increasing industrialization of other countries, then we have ourselves to "blame" for higher prices at the pump.
Addendum A: I'm not saying that improving the quality of life in other countries via industrialization is a bad thing, or that we should "keep them living in their mud huts so we can have cheaper oil... viva le Americana!"
Addendum B: I'm also not saying that I really have any inkling what I'm talking about. Just making random, wild, spitballing guesses that those who know more about the subjects will probably thoroughly debunk. :cool: