- Title: USA: OIL PRICES SURGE PAST 50 DOLLARS A BARREL
- Date: 28th September 2004
- Summary: NEW YORK CITY, NEW YORK, UNITED STATES (SEPTEMBER 28, 2004) (REUTERS - ACCESS ALL) 1. TV OF TRADERS AT NEW YORK MERCANTILE EXCHANGE (4 SHOTS) 0.20 2. MCU (English) RAY CARBONE, PARAMOUNT OPTIONS SAYING: "Thirty years of neglect as far as building new refineries. We have not had a new refinery built in this country for about that period of time, and I think people are getting comfortable having less oil in their inventory and that leaves them susceptible to supply disruption or unexpected events for instance a series of three very strong hurricanes that have kept oil from being loaded in our Gulf of Mexico facilities. So it's really been a long time making this problem happen, but we're here and it's tough to move away from it." 0.55 3. TV NYMEX TRADERS 1.00 4. MCU (English) CARBONE SAYING: "The world is on an economic oil craving craze and we just don't have it and there's a refining problem on top of it all. So the products that come from oil we have a refining capacity and we are at that capacity right now." 1.15 5. TV NYMEX TRADERS (3 SHOTS) 1.33 Initials Script is copyright Reuters Limited. All rights reserved
- Embargoed: 13th October 2004 13:00
- Keywords:
- Location: NEW YORK CITY, NEW YORK, UNITED STATES
- City:
- Country: USA
- Reuters ID: LVA6NYYKSTEHNEMNID5W6QEMTQ3F
- Story Text: Oil prices surge past 50 dollars a berrel as record
demand and compromised supply infrastucture takes a toll on
consumer prices.
Oil prices raced to new record highs above $50 on
Tuesday as rebel threats against Nigerian oil facilities
threatened to inflict further strain on global supplies.
U.S. light crude touched a high of $50.47 a barrel
before easing to $49.80, up 16 cents on the day. London's
Brent crude set a new peak at $46.80 a barrel, and by 1640
GMT was trading at $46.23, up 30 cents.
Oil has grabbed the financial market spotlight this
year, surging 55 percent as rising consumption and the
fallout from years of underinvestment in supply
infrastructure tempts heavy buying from big-money funds.
Producers are pumping at just about full tilt to feed
demand as China's economic expansion powers the fastest
growth in 24 years. Worries about supply security in Saudi
Arabia, Iraq and Russia have magnified the price surge.
Raymond Carbone of Paramount Options says this is a
classic case of supply and demand. "The world is on an
economic oil craving craze and we just don't have it and
there's a refining problem on top of it all. So the
products that come from oil we have a refining capacity and
we are at that capacity right now."
Prices hit new highs after rebels fighting for self
determination in Nigeria warned oil companies to shut
production in the Niger delta before they declare an
all-out-war on Oct 1.
Companies working in the delta shrugged off the threat.
Royal Dutch/Shell and Italy's Agip, a unit of ENI, said
they saw no reason to stop oil operations. Shell has
already cut 30,000 to 40,000 bpd due to security curbs.
So far global economic growth has withstood the impact
of higher energy costs.
In real terms, stripping out the impact of inflation,
oil prices are now near levels hit during the Arab oil
embargo of 1973-4, though much lower than the record $80
annual average high following the 1979 Iranian revolution .
The move above $50 prompted OPEC's top exporter Saudi
Arabia to announce that it will boost its official
production capacity by 500,0000 bpd to 11 million bpd to
help ease supply concerns. The new capacity is not expected to
make
any immediate
impact on actual production with Riyadh already having said
it will meet demand for 9.5 mln bpd this month and next.
OPEC, which controls more than half of global crude
exports, is producing at its fastest rate since the late
1970s in an effort to control prices, but much of the extra
crude is not of the quality best suited for transportation
fuels.
Carbone says lack of foresight on the part of oil
companies is the biggest cause of the current problem. "30
years of neglect as far as building new refineries. We
have not had a new refinery built in this country for about
that period of time, and I think people are getting
comfortable having less oil in their inventory and that
leaves them susceptible to supply disruption or unexpected
events for instance a series of three very strong
hurricanes that have kept oil from being loaded in our Gulf
of Mexico facilities," Carbone says. "So it's really been a
long time making this problem happen, but we're here and
it's tough to move away from it."
A string of hurricanes in the oil-producing Gulf of
Mexico have accelerated the price rise by delaying
shipments and disrupting offshore production and refinery
operations.
U.S. crude stocks have fallen for the last eight weeks
and are running at a 13 million barrel deficit compared
with a year ago, at a time when they should be building
ahead of winter.
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