U.S. oil hits $29 for fear of OPEC

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Tuesday January 18, 6:07 pm Eastern Time

FOCUS-U.S. oil hits $29 for fear of OPEC

(updates prices)

By Richard Mably

NEW YORK, Jan 18 (Reuters) - Oil prices in the United States stormed to new highs on Tuesday as concerns grew that OPEC exporters will maintain a squeeze on supplies this year.

New York Mercantile Exchange crude futures set a nine-year high of $29 shortly before closing at $28.70, up 68 cents.

NYMEX heating oil gains were given added impetus by a severe cold spell in the northeastern United States, the world's largest market for the petroleum product. Heating oil jumped nearly three cents a gallon to finish at 76.70 cents, its highest since October 1996. The contract has risen 12 cents a gallon, 18 percent, in the space of a week.

Dealers said the recommendation from a group of OPEC ministers last week to extend the cartel's output limits beyond a scheduled expiry in March could press crude even higher in the short term.

OPEC oil ministers from Venezuela, Kuwait and Iran recommended 4.32 million barrels a day of supply limits. They made no reference to how long the curbs might be kept.

But OPEC's most influential policy maker, Ali al-Naimi of Saudi Arabia, said previously that he was happy with oil market conditions and could see no reason to change policy throughout the remainder of 2000.

Venezuela, one of the largest suppliers to the United States, has since sounded a note of caution but traders said that without more soothing words from exporters their could be higher prices to come.

Venezuelan Oil Minister Ali Rodriguez said on Monday that in his opinion the production limits would not be retained until year's end although he could not rule out that possibility.

Oil consuming nations are worried that inventories already at uncomfortably low levels will fall lower without more oil from OPEC.

``There is no doubt that the world oil market needs more oil,'' said David Knapp, head of the markets division at the Paris-based International Energy Agency.

Latest figures put U.S. crude stocks at 295 million barrels compared to an historic low of 284 million barrels recorded at the end of 1996.

Market analysts expect inventory levels in the next few weeks to go into deficit versus the lows of the winter of 1996-1997. U.S. crude stocks at end-January 1997 were 301 million barrels.

Dealers said the cold snap in the northeastern U.S. was likely to accelerate the stockdraw.

Forecasts are for temperatures in the U.S. northeast to remain below normal at least for the next ten days.

``It does look as if we're settling in for a lengthy cold spell in the northeast,'' said Joel Burgio of Weather Services Corp. ``It's going to stay very cold for the next week and remain below normal up to 12 days out. It's not possible to be sure yet but we think it could last for another week beyond that,'' he added.

-- (Following@the.news), January 19, 2000

Answers

"Oil prices in the United States stormed to new highs on Tuesday as concerns grew that OPEC exporters will maintain a squeeze on supplies this year. "

Don't you just love how the press has such omniscience? Oil prices surge, and a vague explanation becomes the only reason why. Like when the stock market dips and "analysts" call it profit-taking or some such unhelpful, manipulative nonsense.

Your eyes are growing heavy. We have it all under control. You just want to sleep now. Sleep is good. SLEEP.... SLEEP... SLEEP... SLEEP...

-- Cee Bee (ceebee@hotmail.com), January 19, 2000.


Cee-Bee most excellent reply........

-- kevin (innxxs@yahoo.com), January 19, 2000.

Here is another item to keep an eye on. The Commodity Research Bureau's (CRB) basket of commodities. It just broke out of a fairly significant trading range on the up side.

...and most of that from OPEC anyway (oil here is about tapped out)

-- matt (
rfp@mail.com), January 19, 2000.


It's nice to have a little reserve...to tide us over these rough spots...

-- Mad Monk (madmonk@hawaiian.net), January 19, 2000.


"Latest figures put U.S. crude stocks at 295 million barrels compared to an historic low of 284 million barrels recorded at the end of 1996."

I am REALLY confused here. At the end of 99, weren't stocks way up as a contingency? The first half of 2000 had very mild weather. So why are stocks near record low levels now?????

I really am quite confused.....Have production or imports slowed THAT much? Or were stocks not that high as of 12/31/99. Streamer, RC anyone have access to the comparable number as of 12/31/99.

And can it be reconciled to the current figure?

-- Duke1983 (Duke1983@aol.com), January 19, 2000.


Year end stock as of 12/31/99, 293.3 million barrels

http://www.api.org/release.cgi?id=N001910

-- Be Prepared (its@still.coming), January 19, 2000.


OK, so as of 12/31, there were 293.3 million barrels.

"Latest figures are 295 million"

Anyone know what this as of date would be for the latest figues? So we've actually had a net increase in stocks since 12/31?

Why would prices be going up if supply is not necessarily short? Demand? Weather factors at the beginning of the month didn't indicate heavy demand. Is demand up because of still anticipated disruptions?

Someone help me out here. I was an econ major, but something here just isn't reconciling.

-- Duke1983 (Duke1983@aol.com), January 19, 2000.


CeeBee, that was funny as sh%t!

BTW, novice here : "extend the cartel's output limits beyond a scheduled expiry in March"---does that mean they can't fill the March order in time, so will be cut some slack (extra time) to fill the order?

-- Hokie (Hokie_@hotmail.com), January 19, 2000.


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