Sept. 11 (Bloomberg) -- Crude oil rose to within 50 cents of a record on speculation rising demand and restricted OPEC production may tighten fourth-quarter supplies.
The Organization of Petroleum Exporting Countries pumps 40 percent of the world's oil and will set its output target for the rest of the year at a meeting in Vienna today. It will probably maintain its current ceiling because of ample supplies and the prospect of slowing U.S. demand, officials said.
``If there was possibly going to be an increase they would have hinted at it earlier,'' said Tom Hartmann, commodity broker at Altavest Worldwide Trading Inc. in Mission Viejo, California. Traders are bullish and ``it could be they're not going to sell until they get to $80,'' he said.
Crude oil for October delivery rose as much as 83 cents, or 1.1 percent, to $78.32 a barrel in after-hours electronic trading on the New York Mercantile Exchange, its seventh day of gains. It was trading at $77.89 at 10:10 a.m. in Singapore. New York futures reached a record $78.77 on Aug. 1.
The contract increased 79 cents, or 1 percent, to $77.49 a barrel yesterday, the highest close since July 31. Oil traded as high as $78.47 after settlement.
``Technically the market is still in bullish mode,'' Ric Navy, a broker at BNP Paribas SA in New York, said yesterday. ``There were many opportunities for the bears to take prices lower but they failed.''
Increase Mooted
A 500,000 barrel a day quota increase will be discussed during the meeting and the timing of any increase remains undecided, one of the OPEC delegates said. The second delegate said he doubted other members would agree to such an increase. Both officials declined to be identified before the start of official talks at the group's Vienna headquarters.
Brent crude oil for October settlement rose 36 cents, or 0.5 percent, to $75.84 a barrel on the London-based ICE Futures Europe exchange. It rose 0.6 percent to $75.48 yesterday and reached a record $78.40 on July 16.
New York oil prices gained 7.9 percent the past two weeks after hurricanes threatened production in the Gulf of Mexico and hedge funds and other large speculators increased their bets on rising prices for the first time in five weeks.
``I think the Saudi's will have something to say about that,'' said Chris Mennis, owner of oil broker New Wave Energy LLC in Aptos, California. ``The equilibrium price is certainly not the price of $80 a barrel because that is likely to upset the world economy.''
Saudi Role
Saudi Arabia is the world's biggest oil exporter and the most influential member of OPEC. Oil Minister Ali al-Naimi declined to comment to reporters in Vienna yesterday.
``It's odd that the Saudis are completely silent ahead of this meeting,'' Christopher Edmonds, the managing principal of FIG Partners Energy Research & Capital Group in Atlanta, said yesterday. ``I think it is likely they will float a proposal to increase quotas, probably 500,000 to 1 million barrels a day.''
Oil's gains yesterday widened the premium in New York prices over the Brent product to $2.01 a barrel, the highest since Feb. 13. The October contract's premium over December widened to $2.41 a barrel, a record for the contracts and the biggest three-month spread for the Nymex contract nearest expiry since April 2003.
That strength is odd given ``it looks more and more likely there's something really to be concerned about in terms of global growth,'' Altavest's Hartmann said. Oil may be benefiting as the sliding U.S. dollar prompts investors to shift funds into physical commodities, including grains and metals, he said.
U.S., World Economy
U.S. share prices fell a second day yesterday after Federal Reserve officials suggested the nation's housing slump may be weighing on the economy. The dollar yesterday fell to a 15-year low on an index against the currencies of the nation's major trading partners.
The U.S. is the world's largest oil user. A report tomorrow will probably show its oil stockpiles fell for a ninth week in ten, based on the median estimate from a Bloomberg News survey of 12 analysts.
Inventories probably fell by 3 million barrels. They held 329.7 million barrels on Aug. 31, 10 percent more than the five- year average for the period.
World oil demand peaks in the fourth quarter when refiners make heating fuel for the northern hemisphere winter. OPEC cut output last year to stem rising stockpiles and support prices.
``Today, there is no problem in supply and demand,'' Algerian Oil Minister Chakib Khelil told reporters yesterday. ``Maybe we will have a problem in the next few months. At this meeting, I don't think there is a consensus'' on a production increase,'' he said.
To contact the reporter on this story: Gavin Evans in Wellington at gavinevans@bloomberg.net.
Source :www.bloomberg.com
0 comments:
Post a Comment