Crude Oil Reaches Record $95.80 on Decline in U.S. Stockpiles
Crude Oil Reaches Record $95.80 on Decline in U.S. Stockpiles
By Angela Macdonald-Smith
Nov. 1 (Bloomberg) — Crude oil rose to a record $95.80 a barrel in New York after a U.S. inventories unexpectedly fell to a two-year low.
U.S. crude stockpiles dropped 3.89 million barrels to 312.7 million barrels last week, the lowest since October 2005, according to the Department of Energy. A 400,000-barrel gain was expected in a Bloomberg News survey. Petroleos Mexicanos, or Pemex, resumed some oil exports and revealed that a storm caused more output to be halted than had been assumed.
“The shock of the data is understandable when you consider the news from Pemex that they shut in something like 1 million barrels a day, not 600,000,” said Chris Mennis, owner of oil broker New Wave Energy LLC in Aptos, California. “Most of that would have been going to the U.S.”
Crude oil for December delivery gained as much as $1.27, or 1.3 percent, to $95.80 a barrel in after-hours electronic trading on the New York Mercantile Exchange, the highest since trading began in 1983. It traded at $95.34 at 8:19 a.m. Singapore time.
Yesterday the contract surged $4.15, or 4.6 percent, to settle at $94.53 barrel. Oil is up 62 percent from a year ago.
Prices plunged 3.4 percent the previous day after Goldman Sachs Group Inc., which said in July oil may reach $95 a barrel, told clients it was “time to take profits.”
Economic Growth
Oil also rose yesterday as a government report showed economic growth in the U.S. unexpectedly accelerated in the third quarter after increases in exports, consumer spending and investment made up for another plunge in home construction. Gross domestic product grew at an annual rate of 3.9 percent in the quarter, the most since the first three months of 2006.
The economic data is “definitely supportive for prices,” though the strength in exports isn’t surprising given the weakness in the dollar, said Rowan Menzies, an analyst at Commodity Warrants Australia Pty in Sydney.
The dollar sank to an all-time low of $1.4504 against the euro after the Federal Reserve’s second interest-rate cut in two months.
The economic factors added to the “nasty surprise” of the stockpile numbers, Menzies said. Momentum seems to be building for an increase to $100, yet oil may be down to about $85 within a month in the absence of more supportive news, he said.
Crude-oil inventories at Cushing, Oklahoma, the delivery point for New York futures, fell 17 percent, the energy department report showed. Stockpiles dropped to 15.1 million barrels in the biggest decline since November 2004.
Pemex resumed crude-oil exports at a rate of 800,000 barrels a day and will add another 300,000 by the end of Wednesday local time, Carlos Morales, chief of the company’s exploration and production, said yesterday at a Mexico city press conference. Pemex previously said that 600,000 barrels a day of production had been halted.
Brent crude oil for December settlement rose 57 cents, or 0.6 percent, to $91.20 a barrel on the London-based ICE Futures Europe exchange at 8:20 a.m. Singapore time. Brent reached $90.94 a barrel yesterday, a record intraday price.
To contact the reporter on this story: Angela Macdonald-Smith in Wellington at amacdonaldsm@bloomberg.net
Last Updated: October 31, 2007 20:24 EDT