Wednesday August 30, 3:46 pm Eastern Time

US oil prices surge despite Saudi signal

(UPDATE: Recasts with move upward in prices)

NEW YORK, Aug 30 (Reuters) - U.S. crude oil prices burst well over $33 a barrel on Wednesday amid ongoing supply concerns that overshadowed OPEC kingpin Saudi Arabia's suggestion it would seek a ``suitable'' production increase to ease the crunch.

Benchmark New York Mercantile Exchange (NYMEX) crude oil futures last traded at $33.29 a barrel, up 55 cents to the highest level seen since the end of June.

The level was more than $11 a barrel higher than last year at this time, and roughly $20 higher than the year before -- highlighting a U.S. supply situation that has been worsening since OPEC began closing the spigots on their oil wells in 1998.

According to U.S. supply data released Wednesday morning by the U.S. Energy Information Administration (EIA), crude oil stocks grew last week by two million barrels, but remained a mammoth 32 million barrels below last year's level.

Distillate supplies, which include barrels of home heating oil, were also in dire shape last week, according to the data, keeping steady and roughly 28 million barrels below last year's level.

The starved inventories have highlighted concerns of extremely high heating oil prices this winter, eclipsing last season's ``Northeast heating oil crisis'' which prompted the Clinton Administration to release emergency funds to the poor.

The worries overshadowed a statement on Wednesday from Saudi Arabia's authoritative Supreme Petroleum Council, which said it wanted producer group OPEC to review its mechanism for stabilising world oil prices.

The statement was issued only days before the cartel's meeting in Vienna September 10.

Analysts, looking to OPEC to help avert the looming U.S. winter supply crunch, suggest an output increase decided at the meeting would have to be well above the expected 500,000 barrels per day (bpd) to have any significant impact in the

U.S.

``Any formal increase in OPEC's quotas under 700,000 barrels per day is unlikely to bring fresh oil onto the market, and will only end up legitimising existing over-production, as happened in March and June,'' said a report by Petroleum Finance Corp. (PFC) released Wednesday.

According to PFC, Saudi Arabia alone has increased its exports by 300,000 bpd to a total 8.55 million bpd since early July, which has done little to cool blazing U.S. oil prices.

The firmness in U.S. oil prices Wednesday failed to lift oil company shares, with number one oil company Exxon Mobil (NYSE:XOM - news) down 7/8 to 81-5/8, Chevron (NYSE:CHV - news) down 13/16 to 85-1/4, and Texaco (NYSE:TX - news) down 13/16 to 51-3/4.

http://biz.yahoo.com/rf/000830/n25ilmarke.html

-- Cave Man (caves@are.us), August 30, 2000

Answers

The level was more than $11 a barrel higher than last year at this time, and roughly $20 higher than the year before -- highlighting a U.S. supply situation that has been worsening since OPEC began closing the spigots on their oil wells in 1998.

---------------- IOW: before Y2k "embedded systems" ----------------

-- cpr (buytexas@swbell.net), August 30, 2000.

Charlie, like I said you are an infallible contrary indicater, you should write a market newsletter so that people know what not to do.

There is little if any production capacity left, quit obfuscating this subject with your obsession with Y2k.

-- Cave Man (caves@are.us), August 30, 2000.

Charlie, here's you're last goofy prediction. The Dirty Harry immitation is pretty lame.

Try this JERK OFF and then "try your luck". Its your MONEY, FOOL.

THIS IS A PEAK AREA FOR ALL OIL PRICING. Natural Gas follows OIL on a BTU BASIS.

THAT IMPLIES PRICES ***WON"T GO HIGHER** BEFORE THEY FALL SUBSTANTIALLY. AFTER THEY FALL, THEY MIGHT RISE AGAIN. It is possible they "could" rise higher than they are now but NOT BEFORE A TEMPORARY or LONGER...FALL FROM THESE LEVELS.

FEEL LUCKY TODAY, PUNK????

I have been CORRECT IN MARCH, MAY and JUNE. SO

FEEL LUCKY TODAY, PUNK????

-- cpr (buytexas@swbell.net), August 24, 2000.

-- Cave Man (caves@are.us), August 30, 2000.

ROFLMAO, cave, do You feel lucky? :-)

Before you go off, I AM kidding, I just thought your response was funny.

-- consumer (shh@aol.com), August 30, 2000.

When did Cave Man ever offer anything remotely associated with Y2k as a reason for petroleum problems?

-- Anita (Anita_S3@hotmail.com), August 30, 2000.

http://quote.bloomberg.com/fgcgi.cgi?ptitle=Oil% 20News&touch=1&T=energy_news_story.ht&s=AOa2PAxTKVmVuZXp1

-- gg (sa@de.n), August 30, 2000.

Anita, he didn't offer Y2K as a reason. I offered Y2K as a reason, because the FREAKING Y2K DOOMZIES are out to destroy the world. They may not say outright that Y2K is the cause of all post-Y2K problems, but it is OBVIOUS to anyone with a functioning brain that the Y2K DOOMZIES are obsessed with Y2K. They think EVERYTHING is about Y2K. They will always think everything is about Y2K. Years from now they will still think Y2K is affecting oil, the economy, etc. etc. It's ALL about Y2K...don't you "Get It" yet?? Only I stand between a safe society and the Y2K DOOMZIES.

Y2K was a non-event. Y2K caused NO PROBLEMS WHATSOEVER. Y2K is THE MOST important non-event in history! Nothing like the Y2K MEME will EVER happen again. I will see to that personally!

-- cpr (buytexas@swbell.net), August 30, 2000.

lol. Great parody there.

-- Anita (Anita_S3@hotmail.com), August 31, 2000.

http://quote.bloomberg.com/fgcgi.cgi?ptitle=Bloomberg% 20Energy&touch=1&T=energy_news_front.ht&s=AOa1tzxZnQ3J1ZGUg

Thu, 31 Aug 2000, 2:26am EDT

08/30 16:25 Crude Oil Jumps as Saudi Call for Higher Output Seen Inadequate

By Mark Shenk

New York, Aug. 30 (Bloomberg) -- Crude oil rose to the highest price in almost six months on speculation that a Saudi Arabian plan to raise output may add too little to world supply to meet demand and replenish inventories.

Saudi King Fahd ordered his oil minister to coordinate an output rise with other OPEC members when the group meets Sept. 10. Saudi Arabia, the world's top producer, had suggested a daily increase of 500,000 barrels in July, and a lack of details in today's announcement led traders to conclude that the same amount would be part of the new Saudi plan.

``Even if they give us the 500,000 barrels, clearly it's not enough to make a difference,'' said Nauman Barakat, vice president of global energy trading at ABN Amro Inc. in New York.

Crude oil for October delivery rose 58 cents, or 1.8 percent, to $33.32 a barrel on the New York Mercantile Exchange, the highest closing price since March 7. Prices are up 51 percent from a year ago. Heating oil also rose, moving close to a 10-year high, while gasoline had its biggest gain in three weeks.

In London, Brent crude oil for October settlement rose 62 cents, or 2 percent, to $31.98 a barrel on the International Petroleum Exchange.

King Fahd instructed Saudi Oil Minister Ali al-Naimi to work with his colleagues within the Organization of Petroleum Exporting Countries for a ``suitable increase in production,'' in order to stabilize prices, the official Saudi Press Agency reported.

The Saudi proposal in July to boost daily output by 500,000 barrels was opposed by most other OPEC members.

Early Loss

Prices fell in early trading after the American Petroleum Institute said U.S. crude oil inventories last week rose a greater- than- expected 5.3 million barrels, or 1.8 percent, to 286.0 million barrels.

Even so, U.S. supplies are 10 percent below levels a year ago, while inventories of heating oil are down 40 percent.

Distillate fuel inventories, which include heating oil and diesel, rose 1 million barrels to 112.2 million, the API said. Supplies are down 21 percent from a year earlier.

Inventories of heating oil rose 606,000 barrels last week to 42.8 million, though a year-on-year deficit widened to 40 percent from 39 percent the week before, the API said. With the heating season just a few months away, traders are concerned that refiners may not be able to make up the shortfall before demand kicks in.

``A warm winter is the only thing'' refiners can count on, said Bill O'Grady, director of fundamental futures research at A.G. Edwards & Sons Inc. in St. Louis.

Heating oil for September delivery rose 0.66 cent, or 0.7 percent, to 99.25 cents a gallon on the Nymex. The contract reached $1.015 a gallon yesterday, the highest price since October 1990.

Gasoline Rally

Gasoline surged to its biggest one-day gain since Aug. 10 after the API report showed a 3.1 million-barrel drop in gasoline supplies to 199.1 million. Analysts had expected a smaller drop.

``Just as refiners are starting to maximize production of heating oil at the expense of gasoline, gas inventories fell more than expected,'' said Kyle Cooper, an energy analyst at Salomon Smith Barney in Houston.

Gasoline for September delivery on the Nymex, rose 2.67 cents, or 2.7 percent, to 99.99 cents a gallon. Prices are up 45 percent from a year ago.

``Demand has really bounced back in the last couple weeks,'' said Cooper. ``It looks like Americans are getting used to higher gas prices and are not going to let that stop their driving.''

) Copyright 2000, Bloomberg L.P. All Rights Reserved.

-- (Watching@the.markets), August 31, 2000.

http://cbs.marketwatch.com/archive/20000830/news/current/futures.htx?s ource=htx/http2_mw

Oil tops $33 on further supply woes

Saudis seek production hike to lower prices

By Myra P. Saefong, CBS.MarketWatch.com

Last Update: 6:30 PM ET Aug 30, 2000

NEW YORK (CBS.MW) -- Crude futures shrugged off earlier losses to close above $33 a barrel Wednesday, as concerns that OPEC will agree to raise production at its next meeting, scheduled for Sept. 10, were offset by continued worries over tight petroleum supplies.

On the New York Mercantile Exchange, October crude rose 58 cents to close at $33.32 a barrel after an intraday drop to a low at $32.15.

Prices gained strength near the market's close following news of a ruptured crude-oil pipeline running between Ecuador and Colombia.

"The pipeline situations tend to give a knee-jerk reaction, but there's little long-run reaction to them," commented Jeff Mokychic, head analyst at Allentown, Penn.-based Bridgeton Global.

September heating oil added 0.66 cent to 99.25 cents per gallon, and September unleaded gasoline gained 2.67 cents to 99.99 cents per gallon.

October natural gas rose 15.8 cents to $4.801 per million British thermal units after an expected rise in U.S. supplies. See full story.

Saudis seek output increase

The Saudi Supreme Petroleum Council has instructed Ali Naimi, Saudi Arabia's oil minister, to work with other OPEC members in an effort to seek a "suitable increase in production," according to a Bridge News report. The news prompted concerns that the Organization of Petroleum Exporting Countries will agree to an output hike at its Sept. 10 gathering.

"Right now, sentiment is that OPEC will not increase production as much as we'd like to see," Mokychic said. "However, Saudi Arabia seems to be leading the way to at least get more than the 500,000 barrels the price-band mechanism would trigger." The price band allows for an OPEC output hike of 500,000 barrels if the cartel's basket price remains above $28 a barrel for 20-consecutive days.

Meanwhile, distillate supplies are now almost 29.5 million barrels below last year's level, he said. "Without a significant increase output from OPEC, it'll be very difficult to catch up with even last year's inventory (level) before the heating season."

Crude, distillate supplies remain tight

After the market closed Tuesday, the American Petroleum Institute said crude-oil stocks, as of the week ended Aug. 25, rose by 5.3 million barrels to total 286 million.

The data came in higher than analysts' expectations for a rise of 3.7 million to 4.1 million barrels. However, including predicted revisions to previous data, which did not occur, the net expected increase was pegged at 5 million to 6 million barrels.

Early Wednesday, the Energy Department said crude supplies rose a smaller 2 million barrels.

Distillate inventories, which include diesel fuel and heating oil, rose 1.04 million barrels to 112.2 million, according to the API. Analysts surveyed by Bridge News expected supplies to be up by 2.5 million to 3 million barrels.

The API's small increase in stocks is "far less than the minimum increase of 3 million barrels per week that we cited as necessary for stocks to rebuild to more comfortable levels by the end of September," Chris Stavros of PaineWebber commented in a research note.

The Energy Department's measure of stocks remained unchanged at 112.4 million barrels.

Gasoline supplies dropped 3.07 million barrels, the API said, compared to expectations for a 1 million- to 1.5 million-barrel decline. The Energy Department reported a 4.8 million-barrel drop.

The API's measure of refinery production rates dropped to 95.5 percent of capacity from the prior week's 96.9 percent reading. . . .

-- (Watching@the.markets), August 31, 2000.