US Oil Hits $36, New 10-Year Highgreenspun.com : LUSENET : Grassroots Information Coordination Center (GICC) : One Thread
US Oil Hits $36, New 10-Year High
By Matthew Robinson
NEW YORK (Reuters) - Upbeat comments from President Clinton (news - web sites) on the U.S. economy's resilience to rising energy costs sent U.S. oil prices surging to new 10-year highs of $36 a barrel Friday as traders interpreted it as a sign that he would not tap strategic reserves.
Fresh tensions in the Middle East between Iraq and Kuwait and a storm heading into the oil producing Gulf of Mexico also pulled the market higher in jittery pre-weekend trade.
October crude oil on the New York Mercantile Exchange (NYMEX) gained five percent Friday, settling at $35.92 a barrel Friday, up $1.85 on the day, resetting the post-Gulf war high from Monday's $35.85.
``I think in the short to medium term, the answer... is no,'' Clinton told reporters when asked if Americans should be worried that high oil prices could lead the United States into an economic recession.
Dismissing similarities between the current high price environment and the oil shock of the 1970s, Clinton said that the U.S. economy was far less ``energy intensive'' than it was 25 years ago.
Traders, already bullish on flaring tensions between Iraq and Kuwait, interpreted the Clinton statement to mean there would be no emergency release of oil from the U.S. Strategic Petroleum Reserve (SPR) to calm prices.
The administration had been eyeing the market to see how it reacted to the latest production increase by the Organization of Petroleum Exporting Countries (OPEC (news - web sites)) announced last week before making a decision on the SPR.
After dipping back early in the week to $32 on evidence that more OPEC oil was on offer, oil prices have raced back near post-Gulf war highs as Iraq replayed accusations used to justify the invasion of Kuwait 10 years ago.
Iraq has claimed that Kuwait is again stealing oil by drilling along their border, threatening unspecified recourse. Kuwait responded that it was only producing oil from within its boundaries. The United States issued a warning to Baghdad, also accusing it of recent violations of Saudi Arabia's airspace.
Adding to the nervousness is a tropical depression which was expected to become a hurricane by Monday and threaten oil and gas production in the Gulf of Mexico, with oil companies like Chevron Corp (NYSE:CHV - news), BP Amoco (AMEX:BP - news) and Texaco Inc (NYSE:TX - news) taking steps on Friday to move offshore workers out of the path.
With one-fifth of U.S. domestic oil production and one quarter of natural gas supplies coming from the Gulf of Mexico, the market is wary of any disruption, especially as the winter energy outlook tightens.
Running at full steam just to keep up with this summer's record driving season, neglected U.S. heating oil stocks hover dangerously low as refiners continue to run full throttle to keep pace.
Some refiners, encouraged by high returns, are now putting off October maintenance, leaving them more susceptible to unplanned outages.
-- Carl Jenkins (Somewherepress@aol.com), September 15, 2000
$36 oil? What an amazing set of circumstances are coming into play to produce this. It is unreal.
-- Uncle Fred (email@example.com), September 15, 2000.
It can't stay this way. Something's got to give.
-- Biliver (firstname.lastname@example.org), September 15, 2000.
What I find interesting and disturbing is that the current energy crisis was predicted as a y2k outcome, yet the media is playing dead and doing its usual "news by corporate/government press release" non- sense.....
-- Carl Jenkins (Somewherepress@aol.com), September 15, 2000.