Royal Dutch Shell Plc  .com Rotating Header Image

The New York Times: Oil Steadies on Tight Fundamentals

By THE ASSOCIATED PRESS
Published: November 16, 2007
Filed at 1:45 a.m. ET

SINGAPORE (AP) — Oil prices held steady Friday amid expectations that global crude supplies will remain tight despite a U.S. oil inventory report that showed a surprising build in domestic crude stockpiles.

”The outlook for pricing remains strong based on tight supply-demand fundamentals,” said Victor Shum, energy analyst with Purvin & Gertz in Singapore. ”Because of growth in developing countries, global oil demand growth is going to continue at a good pace.”

A U.S. government report said Thursday that crude oil inventories rose by 2.8 million barrels last week. Analysts surveyed by Dow Jones Newswires, on average, had expected a decline of 300,000 barrels.

Light, sweet crude for December delivery rose 7 cents to $93.50 a barrel in Asian electronic trading on the New York Mercantile Exchange, midmorning in Singapore, ahead of the contract’s expiration at the end of the day. The contract fell 66 cents to settle at $93.43 a barrel Thursday.

The U.S. Energy Information Administration’s report also said gasoline supplies rose by 700,000 barrels while inventories of distillates, which include heating oil and diesel fuel, fell by 2 million barrels.

Crude prices have been volatile this week, falling more than $3 Tuesday and rising more than $2 Wednesday after hitting a record of $98.62 a barrel last week. But some analysts say tight supplies and increasing demand will continue to drive prices higher.

”What’s really supportive of strong pricing is that global demand growth is still exceeding supply growth, and that has eaten into the commercial inventories of consuming nations,” Shum said.

Currently, oil producers are turning out about 85 million barrels a day, while the U.S. Department of Energy says consumption is between 85 million and 86 million barrels a day.

The Organization of Petroleum Exporting Countries has been under pressure to ease the supply tightness, with U.S. Energy Secretary Samuel Bodman saying earlier this week that he asked OPEC to increase production.

OPEC Secretary General Abdalla Salem el-Badri was quoted as saying in a report Thursday that OPEC was ready to increase oil production ”if that will contribute to lower the (crude) price.”

The cartel also reduced its forecast for fourth-quarter demand for oil, saying it would rise 1.97 percent, down from expectations of a 2.1 percent increase a month ago. The revision was due in part to the effect high prices are having on demand.

”Late winter in North America along with the high price of transport fuels appears to be reducing regional oil consumption in the fourth quarter, leading to a downward revision of (100,000) barrels a day for that quarter,” the group said in its monthly oil market report.

Shum noted that prices were also held up by the limits of OPEC’s spare capacity, which left little cover for any supply disruptions, such as the oil pipeline attack in Nigeria reported Thursday that’s expected to reduce production by 50,000 barrels a day. The pipeline feeds one of Royal Dutch Shell PLC’s two main oil export terminals in southern Nigeria.

Oil prices could quickly approach $100 a barrel again if a future inventory report shows an unexpected decline in supplies, if new conflict develops in the Middle East or another oil producing region, or if there’s a late season hurricane or prolonged cold snap in the U.S.

Nymex heating oil futures dropped 0.25 cent to $2.5562 a gallon, while gasoline prices added 0.24 cent to $2.3386 a gallon. Natural gas futures lost 2.2 cents to $7.678 per 1,000 cubic feet.

royaldutchshellplc.com and its sister websites royaldutchshellgroup.com, shellenergy.website, shellnazihistory.com, royaldutchshell.website, johndonovan.website, shellnews.net and shell2004.com are all owned by John Donovan. There is also a Wikipedia article.

0 Comments on “The New York Times: Oil Steadies on Tight Fundamentals”

Leave a Comment

%d bloggers like this: