- Title: USA: OIL HITS 21-YEAR HIGH ON GLOBAL SUPPLY STRAINS.
- Date: 15th May 2004
- Summary: (U7) NEW YORK CITY, NEW YORK, UNITED STATES (MAY 14, 2004) (REUTERS) 1. TV/CU/GV: OIL TRADING ON THE NEW YORK MERCANTILE EXCHANGE (3 SHOTS) 0.37 2. (SOUNDBITE) (English) OIL TRADER ERIC BOLLING, SAYING, "You know I think the energy situation, the energy crisis that we're going through right now is going to have some sort of effect, political effect, on world economies although it may take a little bit longer for it to come into play. You may see some, you know the airline industry feeling the pinch of higher jet fuel prices and some of the trucking industries and whatnot. That may be a later on, down the road problem. I think they may address the issue. I don't know that there's an easy solution to it. Part of our problem is refining capacity in the U.S. and there's no short term answer to that. That's a five to seven year target to actually build new refineries, so I think if anything we're going to have to wait this out. I wouldn't be surprised if they say the same thing that the higher prices might dampen demand and that may be the only short term solution to this." 3. OIL TRADERS 4. (SOUNDBITE) (English) BOLLING SAYING, "A lot of this is. Don't forget that there is a terrorism premium in that barrel as well. You know, when you figure what's going on in the Middle East and the supply disruption of the Iraqi oil through Turkey is causing a two or three dollar premium to it too. So if you alleviate that, it may be the beginning of easing this pressure. Other than that, I hope they are going to have to get comfortable with a high 30 dollar barrel because I think it's going to be around for a while." 5. OIL TRADERS Initials Script is copyright Reuters Limited. All rights reserved
- Embargoed: 30th May 2004 13:00
- Location: NEW YORK CITY, NEW YORK, UNITED STATES
- Country: USA
- Reuters ID: LVACB34M6HNFYQ675QG857B82T3U
- Story Text: Oil hits 21-year high on global supply strains.
Oil prices vaulted to a 21-year high on Friday (May
14) for fear that supplies already stretched by world
economic expansion could be hit by an attack on Middle East
U.S. light crude touched $41.50 a barrel, an all-time
high in the 21-year history of the New York Mercantile
Exchange contract. London Brent stood 34 cents higher at
$38.83 a barrel.
New York-based independent oil trader Eric Bolling said
that high prices might dampen the robust demand for oil,
"that may be the only short term solution to this".
Warnings from a senior Russian official that deliveries
from the world's second biggest oil exporter have hit a
ceiling after many years of growth underlined the strain on
Economic expansion in China, bolstered by renewed U.S.
growth, has placed world supplies under increasing strain,
leaving the Organisation of the Petroleum Exporting
Countries, bar top producer Saudi Arabia, pumping almost
flat out to meet demand.
Oil's price surge has alarmed consuming nations worried
that economic growth could suffer. So far the fears appear
to have proved unfounded.
Allowing for inflation, prices are about half those
during the oil price shock that followed the 1979 Iranian
revolution. Crude averaged $78 a barrel during 1980 when
adjusted for inflation to 2002 prices, according to oil
major BP. Crude in money of the day averaged $35.69 a
barrel in 1980, BP said.
A lack of supply infrastructure to cope with rising
energy demand has done much to create the conditions for a
price spike that has added 27 percent to the cost of crude
Transneft's Vainshtok said Russian exports, dominant in
non-OPEC supply growth over the last five years, could go
no higher without government permission for new export
In the United States refineries are struggling to make
enough new-specification green motor fuel ahead of peak
U.S. summer holiday driving demand.
U.S. gasoline demand, about 45 percent of world
gasoline consumption, is growing at more than three percent
this year because of the growing numbers of
low-mileage-per-gallon sports utility vehicles on America's
Runaway Chinese consumption has sucked supplies away
from other regions and eroded Asia's cushion of spare
refining capacity. More than 1,000 new cars hit the roads
of Chinese capital Beijing each day as vehicle ownership
Concern that Islamic militants could target oil
infrastructure in the Middle East has steepened oil's
Iraqi exports from its southern Gulf terminal were
still running one-third below normal on Friday as engineers
struggled to repair a pipeline sabotaged last week.
U.S.-led forces foiled a suicide boat attack on tankers at
the terminal three weeks ago.
Bolling said that he sees a 2-3 dollar "terrorism
premium" per barrel. "When you figure what's going on in
the Middle East and the supply disruption of the Iraqi oil
through Turkey is causing a two or three dollar premium to
it also," said Bolling.
The U.S. government, especially sensitive about rising
energy costs ahead of November's Presidential election, has
led calls for OPEC to rein in runaway prices by raising
Saudi Arabia has proposed that OPEC raise output quotas
by at least six percent when it meets on June 3 in Beirut.
Ministers will also meet informally next week on the
sidelines of an energy forum in Amsterdam.
But OPEC's proposed output hike may do little more than
legitimise existing production as it is already pumping
more than two million barrels a day in excess of its
official limits of 23.5 million bpd.
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