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AP Worldstream: Oil rises above US$58 a barrel after Norway shuts down two offshore platforms

By: GILLIAN WONG,
Published: Oct 13, 2006

Oil prices rose Friday on news that U.S. heating oil inventories fell and that Norway ordered production shut down at two offshore platforms, sharply reducing flows from the world’s third-largest oil exporter.

Light, sweet crude for November delivery gained 33 cents to US$58.19 a barrel in Asian electronic trading on the New York Mercantile Exchange, midmorning in Singapore. The contract edged up 27 cents to close at US$57.86 a barrel Thursday.

In Norway, safety authorities on Thursday ordered a production shutdown at two offshore platforms. But the fields’ operators _ state oil company Statoil ASA and the Norwegian branch of Royal Dutch Shell PLC _ were likely to keep the fields running at least until they meet safety officials on Friday.

Inger Anda, of the state Petroleum Safety Authority, said the agency wrote to the companies to say it did not accept lifeboat standards at Statoil’s roughly 110,000-barrel-per-day Snorre A platform and Norske Shell ASA’s 140,000-barrel-per-day Draugen field.

That essentially translated as an order for the platforms to shut down, Anda said, which would lead to a 9 percent drop in Norway’s average daily production rate for August of about 2.7 million barrels of crude oil, light oil and natural gas liquids.

The U.S. Energy Information Administration said Thursday in its weekly report domestic inventories of distillates, which include heating oil and diesel, fell by 1.6 million barrels to 149.9 million barrels, due primarily to a decline in refinery operation.

The drop in distillates was comprised almost entirely of falling heating oil inventories, which saw their largest decline since the week ending March 24. That’s worrisome news as blustery weather sweeps across the northern United States, but distillates are still well above the average range for this time of year.

Inventories of crude oil rose by 2.4 million barrels to 330.5 million barrels in the week ending Oct. 6 _ well above the average level for this time of year. Gasoline inventories rose by 300,000 barrels to 215.4 barrels, also above the average for this time of year.

Crude prices are hovering around their lowest levels of the year, as Saudi Arabia _ OPEC’s largest producer _ has yet to publicly confirm anything regarding the OPEC president’s statement Wednesday that members were “nearing consensus” on how to divvy up a 1 million-barrel reduction in output.

Since July, the cost of crude oil has dropped by more than 25 percent amid rising global inventories, concerns about slowing economic growth and a milder-than-anticipated hurricane season.

In other Nymex trading, heating oil futures rose 1.13 cents to US$1.699 a gallon (3.8 liters). Natural gas prices fell 4.7 cents to US$5.735 per 1,000 cubic feet.

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