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The Washington Post: Oil Prices End Over $98 in Light Trading

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Shell Oil Company’s Deer Park refinery and petrochemical facility is shown in the background as vehicles travel along Highway 225 Wednesday, Nov. 21, 2007 in Deer Park, Texas. Energy futures wavered, hesitating on a drive to $100 a barrel Wednesday after the government reported that oil inventories fell unexpectedly last week, but that supplies at a closely watched oil terminal in the Midwest rose for the first time in weeks. (AP Photo/David J. Phillip) (David J. Phillip – AP)

The Washington Post: Oil Prices End Over $98 in Light Trading

By JOHN WILEN
The Associated Press
Friday, November 23, 2007; 3:20 PM

NEW YORK — Oil futures resumed their march toward $100 a barrel Friday, rising to a new record close in light holiday trading on concerns about tight heating oil supplies while also drawing support from a buoyant stock market.

At the pump, meanwhile, gas prices retreated further from their most recent peak, falling 0.1 cent overnight to a national average of $3.086 a gallon, according to AAA and the Oil Price Information Service. Prices rose sharply from mid-October until last week, but have fallen 2.6 cents since, countering predictions that gas prices were destined to add another 10 to 15 cents a gallon to catch up with skyrocketing crude prices.

Analysts now say gas prices are likely to hold steady or even slide a little unless oil rises beyond $100 a barrel.

Oil prices drew support Friday from heating oil futures, which set new records on concerns about tight supplies heading into the winter heating season. Inventories of distillates, which include heating oil, fell sharply last week, the Energy Department reported on Wednesday.

Light, sweet crude for January delivery rose 89 cents to settle at $98.18 a barrel on the New York Mercantile Exchange, besting the previous settlement record by 15 cents, while December heating oil futures rose 1.68 cents to settle at $2.7042 a gallon after earlier setting a new trading record of $2.7181 a gallon.

Crude prices reached a trading record of $99.29 a barrel on Wednesday, and are within the range of inflation-adjusted highs set in early 1980. Depending on how the adjustment is calculated, $38 a barrel then would be worth $96 to $103 or more today.

Heating oil prices are rising due to falling supplies at home and overseas, analysts said.

“The heating oil market, it’s more of a global story,” said Andrew Lebow, senior vice president of MF Global Inc. in New York. “Because of refinery problems in Europe, (supplies) are kind of tight.”

Energy futures also drew support from Friday’s rise in the stock market. Energy investors often view stocks as a proxy for the economy’s strength, betting that a stronger economy will use more oil and gasoline.

Oil traders shrugged off data suggesting OPEC is increasing production more quickly than expected. Oil Movements, an oil tanker tracking firm based in the UK, reported that Organization of Petroleum Exporting Countries oil exports are likely to jump by an average of 720,000 barrels a day in the four weeks ended Dec. 8, more than the expected 500,000 barrels per day.

Oil prices rose 43 percent between August and early November on falling domestic inventories, concerns about supply disruptions overseas and, many analysts argue, speculative buying. But recent forecasts have suggested high prices are cutting demand. The inventory picture has become cloudy, too.

Two weeks ago, domestic oil inventories rose unexpectedly. Last week, supplies fell more than expected, but rose at the Nymex delivery point in Cushing, Okla. Falling supplies at the terminal are seen as a symptom of a tight market, but last week’s gain in Cushing supplies eased those concerns.

In other Nymex trading Friday, December gasoline rose 2.99 cents to settle at $2.467 a gallon while December natural gas rose 15 cents to settle at $7.70 per 1,000 cubic feet.

In London, January Brent crude rose $1.26 to settle at $95.76 a barrel on the ICE Futures exchange.

Analysts warned that the thin trading volumes on a Thanksgiving holiday-shortened trading day exaggerated the effect of each trade.

“Given the thin trade, any minor bullish headlines will be capable of spiking this market to the upside,” said Jim Ritterbusch, president of Ritterbusch & Associates, in Galena, Ill., in a research note.
___

Associated Press Writers Pablo Gorondi in Budapest and Gillian Wong in Singapore contributed to this report.

http://www.washingtonpost.com/wp-dyn/content/article/2007/11/23/AR2007112300315.html

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