Royal Dutch Shell Plc  .com Rotating Header Image

Crude Oil Rises to Record Above $124 a Barrel on Supply Concern

Bloomberg: Crude Oil Rises to Record Above $124 a Barrel on Supply Concern 

Crude Oil Rises to Record Above $124 a Barrel on Supply Concern 
By Christian Schmollinger and Nesa Subrahmaniyan 

May 9 (Bloomberg) — Crude oil rose to a record $124.73 a barrel in New York on concern supplies of diesel and gasoline may be insufficient to meet demand during the U.S. summer driving season. Brent also reached an all-time high in London.

Refinery maintenance and production cutbacks amid a decline in refining profits have curbed diesel supplies this year. Royal Dutch Shell Plc’s Nigerian crude output has been cut by militant attacks and may return within two weeks, a government official said yesterday.

“It’s an interesting, scary moment in pricing. There is no news out that says we should come off,” said Jonathan Kornafel, a director for Asia at Hudson Capital Energy in Singapore. “You can’t put solid deadlines on something in Nigeria right now. It’s so unpredictable and disappointing on so many levels from a production standpoint.”

Crude oil for June delivery climbed as much as $1.04, or 0.8 percent, to $124.73 a barrel, and was at $124.51 a barrel at 2:28 p.m. in Singapore in after-hours trading on the New York Mercantile Exchange. Oil futures settled yesterday at $123.69 a barrel, the highest close since trading began in 1983. Prices are double the level of a year ago.

Brent crude oil for June settlement gained as much as $1.41, or 1.2 percent, to a record $124.25 a barrel on London’s ICE Futures Europe exchange. It was at $123.75 at 2:28 p.m. Singapore time.

A May 7 government report showed that U.S. distillate fuel inventories and refinery operations fell last week. Barclays Capital yesterday raised its forecast for U.S. crude oil prices, citing stronger demand from China and the Middle East.

Diesel Driving

“Diesel is the main driver for the oil rally right now with the U.S., Europe, Asia and Middle East short of cargoes,” said Tetsu Emori, a fund manager at Astmax Ltd. in Tokyo. “The Nigerian shutdown isn’t helping as that type of crude oil is good to make gasoline and diesel.”

U.S. distillate stockpiles declined 107,000 barrels to 105.7 million, the Energy Department reported.

“When refiners in Europe and the U.S. cut output on poor refining margins for gasoline, that affected the supply of diesel as well,” Astmax’s Emori said.

“There’s huge diesel demand growth in Asia, which is going to keep pressure on supplies,” said James Ritterbusch, president of Ritterbusch & Associates, in Galena, Illinois. “Whenever there’s a big rise in one energy market there’s an impact on the psychology of the other markets. Also, demand for crude oil will rise as refiners boost distillate output.”

Heating oil for June delivery traded at $3.5165 a gallon at 12:37 p.m. in Singapore after climbing 6.25 cents, or 1.8 percent, to $3.5098 a gallon in New York yesterday, the highest close since trading began in 1978. The contract reached $3.5310, a record intraday price.

Some traders use heating-oil futures to hedge their diesel and jet-fuel purchases.

Gasoline futures for June delivery rose 1.96 cents, or 0.6 percent, to close at a record $3.1378 a gallon in New York yesterday. The contract traded at $3.1485 a gallon at 12:37 p.m. Singapore time.

To contact the reporters on this story: Christian Schmollinger in Singapore at [email protected]Nesa Subrahmaniyan in Singapore at[email protected]

Last Updated: May 9, 2008 02:30 EDT

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 “Crude Oil Rises to Record Above $124 a Barrel on Supply Concern”

Leave a Comment

%d bloggers like this: