tobedawg
23 Sep 2004, 10:31 AM
Oil falls as U.S. may open reserve
Two U.S. refiners reportedly ask to tap strategic stockpile after hurricane disrupted supplies.
September 23, 2004: 10:58 AM EDT
LONDON (Reuters) - Oil prices fell Thursday as the U.S. government considered whether to release crude from the U.S. petroleum reserve after Hurricane Ivan sliced into supplies.
U.S. light crude for November delivery fell 40 cents to $47.95 a barrel after rising more than $1 Wednesday following an eighth straight weekly fall in U.S. inventories.
U.S. prices are still within sight of the Aug 20 all-time high of $49.40. London's Brent crude, which matched its $45.15 record high Thursday, fell 33 cents to $44.60 a barrel.
"(An SPR release) would have an initial impact," said Jim Ritterbusch, president of Ritterbusch and Associates. "But I wouldn't be surprised to see the market rally after the news is out."
The government source said officials were reviewing requests, one for 100,000 to 200,000 barrels and the other for one million to two million barrels.
The last time Washington loaned oil from the SPR was in late 2002 when Hurricane Lili disrupted shipments into Gulf Coast distribution hubs.
The White House has said it would not withdraw oil from the 670-million-barrels reserve, held in underground salt caverns at four sites in Louisiana and Texas, except for a severe supply disruption.
Last month, Vice President Dick Cheney defined such a disruption as the loss of 5-6 million barrels per day (bpd) in U.S. imports. The United States imports about 11 million bpd of crude and petroleum products.
SPR loan requests
U.S. government data showed a drop of 9.1 million barrels in crude inventories in the week to Sept 17 after Hurricane Ivan thrashed through the Gulf of Mexico, slowing imports and disrupting offshore production.
The fall, the eighth in as many weeks, put national commercial stocks at 269.5 million barrels, the lowest level since February and almost 14 million barrels below a year ago.
Thursday, the remnants of Hurricane Ivanstrengthened into a renewed tropical storm and were again disrupting U.S. oil and natural gas production and imports in the Gulf of Mexico.
The Energy Information Administration (EIA) also reported declines in oil products' tanks, with distillates falling 1.5 million barrels and key heating oil down by one million barrels.
Heating oil stocks normally build at this time of year ahead of the northern hemisphere winter. New York heating oil futures have hit record highs.
"The falls in oil product inventories are more significant than the fall in crude inventories. Crude imports will rebound, while restoring balance in oil products will take far longer," said Barclays Capital in a review of the weekly EIA data.
There are also concerns of further supply disruptions from Yukos, Russia's biggest oil exporter, which is battling bankruptcy from multi-billion-dollar tax debts.
Yukos's main subsidiary, Yuganskneftegaz, was forced to cut crude output by 35,000 bpd, or two percent of Yukos production, after a power firm cut supplies for non-payment.
Global supplies are straining to meet the fastest growth in oil demand in 24 years. World crude production is close to its limits with only top exporter, Saudi Arabia, holding any significant spare capacity of about one million bpd.
Two U.S. refiners reportedly ask to tap strategic stockpile after hurricane disrupted supplies.
September 23, 2004: 10:58 AM EDT
LONDON (Reuters) - Oil prices fell Thursday as the U.S. government considered whether to release crude from the U.S. petroleum reserve after Hurricane Ivan sliced into supplies.
U.S. light crude for November delivery fell 40 cents to $47.95 a barrel after rising more than $1 Wednesday following an eighth straight weekly fall in U.S. inventories.
U.S. prices are still within sight of the Aug 20 all-time high of $49.40. London's Brent crude, which matched its $45.15 record high Thursday, fell 33 cents to $44.60 a barrel.
"(An SPR release) would have an initial impact," said Jim Ritterbusch, president of Ritterbusch and Associates. "But I wouldn't be surprised to see the market rally after the news is out."
The government source said officials were reviewing requests, one for 100,000 to 200,000 barrels and the other for one million to two million barrels.
The last time Washington loaned oil from the SPR was in late 2002 when Hurricane Lili disrupted shipments into Gulf Coast distribution hubs.
The White House has said it would not withdraw oil from the 670-million-barrels reserve, held in underground salt caverns at four sites in Louisiana and Texas, except for a severe supply disruption.
Last month, Vice President Dick Cheney defined such a disruption as the loss of 5-6 million barrels per day (bpd) in U.S. imports. The United States imports about 11 million bpd of crude and petroleum products.
SPR loan requests
U.S. government data showed a drop of 9.1 million barrels in crude inventories in the week to Sept 17 after Hurricane Ivan thrashed through the Gulf of Mexico, slowing imports and disrupting offshore production.
The fall, the eighth in as many weeks, put national commercial stocks at 269.5 million barrels, the lowest level since February and almost 14 million barrels below a year ago.
Thursday, the remnants of Hurricane Ivanstrengthened into a renewed tropical storm and were again disrupting U.S. oil and natural gas production and imports in the Gulf of Mexico.
The Energy Information Administration (EIA) also reported declines in oil products' tanks, with distillates falling 1.5 million barrels and key heating oil down by one million barrels.
Heating oil stocks normally build at this time of year ahead of the northern hemisphere winter. New York heating oil futures have hit record highs.
"The falls in oil product inventories are more significant than the fall in crude inventories. Crude imports will rebound, while restoring balance in oil products will take far longer," said Barclays Capital in a review of the weekly EIA data.
There are also concerns of further supply disruptions from Yukos, Russia's biggest oil exporter, which is battling bankruptcy from multi-billion-dollar tax debts.
Yukos's main subsidiary, Yuganskneftegaz, was forced to cut crude output by 35,000 bpd, or two percent of Yukos production, after a power firm cut supplies for non-payment.
Global supplies are straining to meet the fastest growth in oil demand in 24 years. World crude production is close to its limits with only top exporter, Saudi Arabia, holding any significant spare capacity of about one million bpd.