Royal Dutch Shell Plc  .com Rotating Header Image

UpstreamOnline: Crude shatters $96 barrier

By Upstream staff

Oil leaped more than 1% today, briefly topping $96 for the first time and extending the previous day’s 5% jump after an unexpected sharp fall in US crude stocks and data showing strong economic growth.

The rise toward oil’s inflation-adjusted peak of $101.70 from April 1980 was also supported by US dollar weakness after a Federal Reserve interest rate cut, and Qatar’s oil minister reiterated that the roaring market was beyond Opec’s control.

US oil for December delivery rose as high as $96.24 a barrel in electronic trade. By 0739 GMT it was up 86 cents at $95.39 a barrel, paring some gains. December Brent crude also hit its record high of $91.63, up $1 on the day.

Oil soared $4.15 or nearly 5% yesterday, its biggest one-day gain in 10 months, after US data showed an unexpected 3.9 million-barrel drop in crude stocks last week, most of it at the Cushing, Oklahoma, delivery point.

“The US inventory report has reaffirmed the belief that market conditions are tightening and oil prices are ratcheting up higher on that basis,” David Moore, a resource analyst at the Commonwealth Bank of Australia, told Reuters.

Prices were also buoyed by the Federal Reserve’s quarter percentage point interest rate cut, its second to stave off fears of a recession, moves that have added liquidity to financial markets, some of which has been ploughed in oil.

Prices are now nearing their highest even when adjusted for inflation, but the economy of the world’s biggest energy consumer has shown surprising resilience to high oil prices, growing at a brisk clip in the third quarter.

However, Opec continues to resist calls for more oil as it blames speculation and politics for the rise.

“The question is if there is any shortage in the supply. There is no … shortage in crude oil,” Qatar Oil Minister Abdullah al-Attiyah said today.

“It’s market-driven and the market is out of our control,” he said, reiterating comments made earlier this week.

And Iran said Opec was not expected to discuss raising output at informal talks in Riyadh in mid-November.

“I doubt that because there is enough oil in the market … Iran does not see a need for an output increase,” Iran’s acting oil minister Gholamhossein Nozari told Reuters, when asked if Opec would discuss increasing production in the Saudi capital.

Analysts saw little standing in the way of a run at $100, particularly with geopolitical factors again on the rise.

Iran warned the US yesterday that it would find itself in a “quagmire deeper than Iraq” if it attacked the Islamic state, and Russia intensified efforts for a diplomatic solution to Tehran’s nuclear row with the West.

“It’s just a matter of time… Everything you see now are bullish factors, so there is no reason for you to sell at the moment,” said Ken Hasegawa, commodity derivatives sales manager of Fimat Japan.

31 October 2007 20:32 GMT  | last updated: 01 November 2007 09:12 GMT and its sister websites,,,,, and are all owned by John Donovan. There is also a Wikipedia article.

0 Comments on “UpstreamOnline: Crude shatters $96 barrier”

Leave a Comment

%d bloggers like this: