Crude oil prices moved within range of $55 again on Thursday, a day after briefly surpassing the mark over a fall in United States distillate fuels stocks that raised fears of shortages as the northern-hemisphere winter approaches.
US distillate stocks fell for a fifth straight week, the US Department of Energy said on Wednesday, dropping 1,9-million barrels to 119-million barrels, or 9,5% below year-earlier levels.
The steady decline in commercial inventories of distillate came as traders remained jittery about the strong global demand for — and limited supply of — crude oil. A renewed pledge from the Organisation of Petroleum-Exporting Countries (Opec) on Thursday to pump more crude didn’t have an immediate impact on prices.
After two days of declines, the price of crude on the New York Mercantile Exchange zoomed past $55, before settling at $54,92 for November contracts, which expired on Wednesday.
Crude for December in Asian hours electronic trade on the Nymex was up 42 cents at $54,82, while heating oil for November was at a record $1,5699 per gallon (3,8 litres) on Thursday. December Brent on London’s International Petroleum Exchange was $50,56 per barrel.
On Wednesday, European Union Economic and Monetary Affairs Commissioner Joaquin Almunia said high oil prices have forced him to lower his forecast of 2,2% economic growth in the euro zone next year.
”Oil-price increases and the general economic environment would suggest lower growth for next year,” Almunia said. ”A few months ago, we thought we were dealing with a transitory situation, but now the situation has become more stable.”
French Finance Minister Nicolas Sarkozy had also asked — and failed to convince — the EU to provide more tax breaks on fuel to ease the pressure on consumers, saying the oil spike is threatening to derail European growth.
Crude now costs about 80% more than a year ago but will need to climb to $80 per barrel in order to surpass its all-time peak — in inflation-adjusted terms — set in February 1981.
The heating oil decline came amid falling imports of distillate and in spite of increased production from US refiners, meaning domestic demand growth outstripped growth in supply.
”This is the time of the year when you’re usually building inventories,” said Tom Bentz, a trader at BNP Paribas Futures in New York. ”It seems we probably peaked on inventories a month or two early. The weather is getting colder, so it’s unlikely that stocks are going to be able to build from here.”
While heating oil stocks declined, the Department of Energy reported that US crude oil stocks grew by 1,2-million barrels to 279,4-million barrels, or 3,7% below last year.
Oil prices have gone up sharply in the past month because of production snags in the Gulf of Mexico, where more than 22,6-million barrels of production have been lost since Hurricane Ivan hit mid-September.
Potential supply problems in Iraq, Venezuela, Nigeria and Russia have kept traders on edge all year, especially since the world’s available production capacity is just 1% above the daily diet of 82-million barrels per day. Such a low figure gives little breathing space if there is a supply disruption.
”There is not enough out there right now, there’s no actual extra supply that could loosen us up, there is no spare capacity,” said Ira Eckstein, a trader from Area International Trading Corporation in New York.
Meanwhile, Opec president Purnomo Yusgiantoro said on Thursday the 11-nation cartel will begin pumping out more crude as soon as possible to meet winter demand.
”I have asked Opec and non-Opec producers to increase production to ensure that there is enough supply,” he said, adding that this is ”the best thing that Opec can do now” to cool prices.
Earlier pledges to increase production by the cartel, which pumps out about 30-million barrels daily, had failed to calm a jittery market as the crude offered was of high sulfur content, undesirable for refiners at present. — Sapa-AP