USA: Crude oil prices drop slightly off record highs but gasoline prices climb to record levels

Record ID: 344604

  • Title: USA: Crude oil prices drop slightly off record highs but gasoline prices climb to record levels
  • Date: 19th May 2004
  • Summary: NEW YORK CITY, NEW YORK, USA (MAY 17, 2004) (REUTERS) OIL TRADING FLOOR ON THE NEW YORK MERCANTILE EXCHANGE (NYMEX) VARIOUS OF OIL TRADERS (SOUNDBITE) (English) ABN AMRO OIL TRADER ALEX KERN SAYING: "I think that there's an abundance of oil in the world. Then question is whether or not you're going to pull it out and transport it in a timely fashion. They seem like they've gotten that system down pretty well. Most of the oil that is headed here seems to float on the water, it doesn't seem to hit our shores as stockpile. So there's plenty of oil out there it's just whether or not it comes in a timely fashion for refiners to burn it." WASHINGTON D.C., USA (MAY 17, 2004) (REUTERS) VARIOUS OF CAR DRIVERS PUMPING GASOLINE BOARD SHOWING GAS PRICES MAN PUMPING GAS NEW YORK CITY, NEW YORK, USA (MAY 17, 2004) (REUTERS) (SOUNDBITE) (English) KERN SAYING: "I think that what's sending gasoline higher is the fact that there are so many different blends of gasoline being used in the U.S. and until you were to use lets say one specific blend of gasoline and let a real supply-demand equation actually find a balance in the market, you're going to have spikes like this all the time." WASHINGTON DC, USA (MAY 17, 2004) (REUTERS) DRIVER PUMPING GAS NEW YORK CITY, NEW YORK, USA (MAY 17, 2004) (REUTERS) VARIOUS OF OIL TRADERS ON THE NYMEX
  • Embargoed: 3rd June 2004 13:00
  • Keywords:
  • Location: NEW YORK CITY, NEW YORK AND WASHINGTON D.C., UNITED STATES
  • Country: USA
  • Topics: Finance,Energy
  • Reuters ID: LVAA6UMFL8VVRJRMCYYKT6HOLYYB
  • Story Text: U.S. crude oil prices drop slightly off record highs in Monday midday trade, but gasoline prices climb to record levels.
    NYMEX crude oil futures pared losses at midday on Monday as gasoline sprang to another record with persistent concerns about gasoline supply and Middle East unrest providing key supports for prices.
    NYMEX crude for June delivery traded 28 cents lower at $41.10 a barrel, after dropping as much as 58 cents to $40.80 in the early going.
    It has posted a session high of $41.35, below the overnight record of $41.85, the highest level NYMEX crude has reached since the exchange introduced oil futures in 1983.
    Alex Kern, an oil trader for ABN AMRO said inefficiency in the way oil is delivered was the real cause of higher oil prices, not a shortage of crude.
    "I think that there's an abundance of oil in the world.
    Then question is whether or not you're going to pull it out and transport it in a timely fashion. They seem like they've gotten that system down pretty well. Most of the oil that is headed here seems to float on the water, it doesn't seem to hit our shores as stockpile. So there's plenty of oil out there it's just whether or not it comes in a timely fashion for refiners to burn it," said Kern.
    With the June contract expiring on Thursday, July crude traded 25 cents lower at $41.05 a barrel.
    Last week NYMEX crude futures pushed past the all-time NYMEX mark of $41.15 hit on Oct. 10, 1990, two months after Iraq invaded Kuwait before the first Gulf War.
    Technical analysts on Monday charted nearby resistance at $43.50, with support slated at $40.90.
    In London, July Brent traded 30 cents lower at $37.56 a barrel. The June contract went off the board on Friday at $38.76.
    With options on the June contract expiring at the end of the day's business, open interest on call options at $40 numbered 8,601, the largest concentration of open interest, according to the NYMEX Web site. Call options are contracts allowing dealers to buy oil at that level.
    Despite the losses, the market remained jittery following the killing of the president of Iraq's Governing Council on Monday in a suicide car bombing in Baghdad, traders said.
    The latest violence in Iraq reflected instability in the Middle East, which is feeding fears of possible disruptions of oil supplies from the region, traders and analysts said.
    NYMEX June gasoline climbed to a new record of $1.4250 a gallon, gaining 1.49 cents, and erasing the overnight high of $1.4210. It later eased from the highs and was trading 0.19 cent up at $1.4120. It posted a session low of $1.4030.
    Gasoline has surged more than 24 cents or 20 percent since April 12, when its almost daily record-breaking ascent began after it hit $1.1830, erasing the May 2001 record of $1.1750.
    Kern said the many varieties of gasoline available at the pump is making it an inefficient market and resulting in higher prices.
    "I think that what's sending gasoline higher is the fact that there are so many different blends of gasoline being used in the U.S. and until you were to use lets say one specific blend of gasoline and let a real supply-demand equation actually find a balance in the market, you're going to have spikes like this all the time," said Kern.
    Resistance was charted Monday at $1.50, with support slated at $1.40. U.S. gasoline stocks sat 5.2 million barrels below year-ago levels as of May 7, supporting prices ahead of the traditional start of the U.S. summer peak driving season at the Memorial Day weekend at the end of May.
    Recent unrest in Nigeria, a big OPEC source of sweet crude, has added to the security premium tacked onto crude prices.
    Iraq's exports remain below the levels being shipped at the end of the Saddam Hussein regime. A pipeline section feeding the Basra terminal was recently blown up by saboteurs.
    OPEC, with heavyweight Saudi Arabia having already called for a production quota increase of 1.5 million barrels per day, will convene informally this week on the sidelines of an Amsterdam conference of consumers and producers and again in Beirut on June 3 for a full ministerial meeting.
    OPEC President Purnomo Yusgiantoro said on Monday the cartel was unhappy with such high oil prices. "High oil prices can cause recession. We are not happy with high oil prices," said Purnomo, who is also Indonesia's oil minister.
    NYMEX June heating oil was down 0.49 cent at $1.0360 a gallon, trading between $1.0280 and $1.0450, after breaking slightly above support at $1.04. Resistance is seen at $1.09.
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