U.S. oil sets new peaks; no let-up in supply fears

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Posted at 1:16 p.m. PDT Wednesday, September 20, 2000

U.S. oil sets new peaks; no let-up in supply fears NEW YORK20 (Reuters) - U.S. oil prices bounded to fresh decade highs on Wednesday as new supply figures underlined fears that the country's pre-winter stock cushion is running perilously thin.

October crude on the New York Mercantile Exchange (NYMEX) hit a new peak of $37.80 a barrel after a weekly government report showed that U.S. crude oil stocks fell another 2.4 million barrels from last week and heating oil inventories grew just 630,000 barrels to remain more than a third below last year's levels.

By 2:30 p.m. crude was trading up 59 cents at $37.00.

Prices have gained four dollars, or 12 percent, this month alone, as renewed tensions between Iraq and the United States fueled fears that Iraq could shut off its oil exports in the run-up to November's U.S. presidential election.

U.S. crude oil inventories are parked near their lowest level for 24 years, forcing the Clinton administration to consider an emergency oil release from the Strategic Petroleum Reserve (SPR).

``Emergency measures may be imminent,'' said a research note from Deutsche Bank. ``Extensive political and economic hand-wringing grips Washington as the debate over use of the SPR is heating up. We now believe a release over the next month is more likely than not to occur.''

With NYMEX prices now in sight of their all-time Gulf War high of $41.15 per barrel, President Clinton said on Tuesday he wanted a ``few more days'' to decide whether to tap the 571-million-barrel strategic reserve for only the second time in history.

``Shortly, I suspect, the president will make some decisions,'' Energy Secretary Bill Richardson said Wednesday.

Leaders across the industrialised world are under pressure from local politicians and their constituents to do something about rising energy costs which have sparked consumer protests and set inflation fears whirring.

France on Tuesday called for an urgent meeting of OPEC oil producers with the United States and the European Union to address tight supplies.

OPEC's decision, announced on September 10, to ramp up production by an extra 800,000 barrels per day, or three percent, has not convinced traders that supplies will be adequate to replenish depleted stocks.

OPEC countries reply that only Saudi Arabia now has the spare capacity to increase production, adding that it is consuming countries' limited refining capacity that is causing the current price run-up.

Next week, leaders from OPEC will meet in Caracas, Venezuela for the oil cartel's first heads-of-state summit in 25 years.

http://www.mercurycenter.com/breaking/docs/046420.htm

-- Martin Thompson (mthom1927@aol.com), September 20, 2000


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