Brent reached $91.71 a barrel yesterday, the highest since trading began in 1988.
Friday, November 2nd, 2007Oil Heads for Fourth Weekly Gain on Consumption, Weaker Dollar
By Nesa Subrahmaniyan and Angela Macdonald-Smith
Nov. 2 (Bloomberg) — Crude oil headed for a fourth weekly gain because of concern consumption will outpace supply and as a weaker U.S. dollar spurred demand for commodities.
Oil may rise next week on speculation that OPEC won’t raise production as fast as usage grows this winter, 60 percent of analysts said in a Bloomberg survey. The dollar has fallen against 10 of the 16 most-traded currencies this week, helping to drive oil to a record $96.24 a barrel in New York yesterday.
“The uptrend is still intact and it will take a big sell- off for it to burst,” said Anthony Nunan, deputy general manager of risk management at Mitsubishi Corp. in Tokyo. “There will be some people trying to take profits before the year ends.”
Crude oil for December delivery gained as much as 66 cents, or 0.7 percent, to $94.15 a barrel in after-hours electronic trading on the New York Mercantile Exchange. It was at $93.98 at 12:09 p.m. Singapore time. Prices have climbed 2.3 percent this week, after rising 13 percent in the previous three weeks.
Yesterday, the contract fell $1.04, or 1.1 percent, to settle at $93.49. Oil is up 62 percent from a year earlier.
Prices rose on Oct. 31 by the most in nine months after the U.S. Energy Department reported an unexpected drop in crude-oil stockpiles and the Federal Reserve cut interest rates.
Inventories, Fed
U.S. crude inventories fell to the lowest in two years, declining 1.2 percent to 312.7 million barrels in the week ended Oct. 26.
Brent crude oil for December settlement gained as much as 98 cents, or 1.1 percent, to $90.70 a barrel on the London-based ICE Futures Europe exchange. The contract was at $90.53 at 12:11 p.m. Singapore time. Brent reached $91.71 a barrel yesterday, the highest since trading began in 1988.
Twenty-one of 35 analysts surveyed, or 60 percent, said oil prices will rise through Nov. 9, the first bullish response since July 6. Ten, or 29 percent, said prices will decline and four forecast little change. Last week, 49 percent of respondents said oil would fall.
Oil producers, including the Organization of Petroleum Exporting Countries, are powerless to stop prices from reaching $100 as few countries can produce more crude, Oman’s energy minister said yesterday.
Oman’s Mohammed bin Hamad al-Rumhy said he didn’t know of one oil-producing country that isn’t at maximum output.
“Maybe Saudi could produce more, but the lack of spare capacity is a major factor,” he said in a phone interview from Muscat.
Mexican Oil
Mexico, the third-largest supplier of oil to the U.S., will resume full production from wells in the Gulf of Mexico by the end of the day, after an Oct. 28 storm disrupted output, a spokesman for the state oil company said Nov. 1.
Petroleos Mexicanos has been ramping up production since Oct. 30, Carlos Ramirez, a spokesman for the Mexico City-based company, said.
Mexico pumps about 3.1 million barrels a day, and 82 percent of it comes from offshore reserves in the Gulf of Mexico. Pemex exported about 1.7 million barrels a day in the third quarter of 2007, with 81 percent going to the U.S.
Global conditions support further price gains for both crude oil and gold, Investec Bank (Australia) Ltd. said. Tensions between Turkey and Iraq over Kurdish militants, as well as over Iran’s nuclear program have helped drive prices higher, while the dollar fell to a record low of $1.4504 against the euro on Oct. 31.
“A terminally ill-looking U.S. dollar, geopolitical tensions and the onset of increased demand ahead of the Northern Hemisphere winter are all supportive for oil,” Investec said today in a report.
Prices will probably fall once the $100 level is reached, National Australia’s Burg said.
“One hundred dollars isn’t really something I would see as sustainable,” said Gerard Burg, a minerals and energy economist at National Australia Bank Ltd. in Melbourne. “A lot of people would see that as a good place to sell.”
To contact the reporters on this story: Nesa Subrahmaniyan in Singapore at nesas@bloomberg.net ; Angela Macdonald-Smith in Wellington at amacdonaldsm@bloomberg.net
Last Updated: November 2, 2007 00:29 EDT
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