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Oil Prices Rise on Cold Weather Worries
Tuesday October 25, 2:42 pm ET
By Madlen Read, AP Business Writer
Crude Oil Futures Rally Above $62 a Barrel on Worries That a Cold Winter Could Raise U.S. Demand
NEW YORK (AP) -- Crude oil futures rallied above $62 a barrel Tuesday on worries that a cold winter could raise U.S. demand for heating oil, putting a strain on storm-ravaged oil facilities in the Gulf of Mexico.
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Light, sweet crude for December delivery on the New York Mercantile Exchange rose $1.93 to $62.25 a barrel in afternoon trading.
In London, December Brent crude futures rose $1.86 to $60.10 a barrel on the International Petroleum Exchange.
Heating oil rose more than 9 cents to $1.8925 a gallon, while gasoline rose more than 8 cents to $1.6650 a gallon. Natural gas rose $1.12 to $14.11 per million British thermal units.
Prices had dropped Monday after Hurricane Wilma spared oil refineries, platforms and rigs in the Gulf of Mexico, which are still recovering from hurricanes Katrina and Rita. Wilma crashed ashore instead in Florida.
Much of the gains Tuesday came from "a lot of speculative buying," said Ed Silliere, vice president of risk management at Energy Merchant LLC in New York. But, he added, heating oil led the rally due to forecasts of a long, cold winter.
"If that happens, it's going to be a challenge to meet oil demand in this country," said Phil Flynn, analyst at Alaron Trading Corp. in Chicago.
A nor'easter brought snow to parts of Pennsylvania, New York and New England on Tuesday. The National Oceanic and Atmospheric Administration is predicting the U.S. winter to be colder than last year, but warmer than the 30-year average.
Some saw a legitimate buying opportunity Monday with prices near $60 a barrel. But James Cordier, president of Liberty Trading Group in Tampa, Fla., said Tuesday's rally was partly technical in nature, as traders who had banked on even lower prices by now were forced to cover their bets, pushing prices higher.
Cordier also said the arrival of colder weather in some parts of the country revived concerns about wintertime demand for heating oil and natural gas and whether supplies would be adequate. But he predicted that, without a colder-than-normal winter, oil prices could fall to the mid-$50 range.
A weekly inventory report due Wednesday from the United States is expected to show crude stocks rose last week, boosted by increased imports and refineries that were still operating at a relatively low rate, analysts said.
"Crude stocks should show a sizable increase as an expected further recovery in imports toward 10 million barrels a day more than negates the impact of additional refinery restarts," said Jim Ritterbusch of Ritterbusch & Associates.
But analysts are expecting a decrease in inventories of distillate fuels, which include diesel and heating oil. Distillate inventories have dropped in the past five weeks, and another big drop could spark a surge in prices, Flynn said.
The U.S. Minerals Management Service said Tuesday that 69 percent of daily oil production and 56 percent of daily natural gas production remains off-line in the aftermath of Hurricanes Katrina and Rita.
Exxon Mobil Corp. said Monday it has restored about 80 percent of its oil and 85 percent of its gas production of its U.S. Gulf of Mexico production affected by the hurricanes, but about 20,000 barrels a day of gross oil production and 200 million cubic feet a day of gross natural gas volumes remain shut-in.
Vienna's PVM Oil Associates also pointed to the U.S. government's ongoing sale of a promised 30 million barrels in emergency stocks as putting a damper on prices.
Oil prices reached $70.85 a barrel on Aug. 30 after Hurricane Katrina made landfall, but have since declined 15 percent, apparently due to rising crude oil inventories and worries that fuel demand waned in the face of high prices.
But some analysts warned against placing too much weight on rising crude inventories coupled with declining demand, saying little improvement had been made to solve the fundamental problem of supply and refining capacity tightness.
"Even if oil demand growth remains weak in 2006, it is expected to grow faster than refining capacity, and that particular bottleneck in the supply chain is unlikely to disappear," the London-based Center for Global Energy Studies said in a report released Monday.
Oil Prices Rise on Cold Weather Worries
Tuesday October 25, 2:42 pm ET
By Madlen Read, AP Business Writer
Crude Oil Futures Rally Above $62 a Barrel on Worries That a Cold Winter Could Raise U.S. Demand
NEW YORK (AP) -- Crude oil futures rallied above $62 a barrel Tuesday on worries that a cold winter could raise U.S. demand for heating oil, putting a strain on storm-ravaged oil facilities in the Gulf of Mexico.
ADVERTISEMENT
Light, sweet crude for December delivery on the New York Mercantile Exchange rose $1.93 to $62.25 a barrel in afternoon trading.
In London, December Brent crude futures rose $1.86 to $60.10 a barrel on the International Petroleum Exchange.
Heating oil rose more than 9 cents to $1.8925 a gallon, while gasoline rose more than 8 cents to $1.6650 a gallon. Natural gas rose $1.12 to $14.11 per million British thermal units.
Prices had dropped Monday after Hurricane Wilma spared oil refineries, platforms and rigs in the Gulf of Mexico, which are still recovering from hurricanes Katrina and Rita. Wilma crashed ashore instead in Florida.
Much of the gains Tuesday came from "a lot of speculative buying," said Ed Silliere, vice president of risk management at Energy Merchant LLC in New York. But, he added, heating oil led the rally due to forecasts of a long, cold winter.
"If that happens, it's going to be a challenge to meet oil demand in this country," said Phil Flynn, analyst at Alaron Trading Corp. in Chicago.
A nor'easter brought snow to parts of Pennsylvania, New York and New England on Tuesday. The National Oceanic and Atmospheric Administration is predicting the U.S. winter to be colder than last year, but warmer than the 30-year average.
Some saw a legitimate buying opportunity Monday with prices near $60 a barrel. But James Cordier, president of Liberty Trading Group in Tampa, Fla., said Tuesday's rally was partly technical in nature, as traders who had banked on even lower prices by now were forced to cover their bets, pushing prices higher.
Cordier also said the arrival of colder weather in some parts of the country revived concerns about wintertime demand for heating oil and natural gas and whether supplies would be adequate. But he predicted that, without a colder-than-normal winter, oil prices could fall to the mid-$50 range.
A weekly inventory report due Wednesday from the United States is expected to show crude stocks rose last week, boosted by increased imports and refineries that were still operating at a relatively low rate, analysts said.
"Crude stocks should show a sizable increase as an expected further recovery in imports toward 10 million barrels a day more than negates the impact of additional refinery restarts," said Jim Ritterbusch of Ritterbusch & Associates.
But analysts are expecting a decrease in inventories of distillate fuels, which include diesel and heating oil. Distillate inventories have dropped in the past five weeks, and another big drop could spark a surge in prices, Flynn said.
The U.S. Minerals Management Service said Tuesday that 69 percent of daily oil production and 56 percent of daily natural gas production remains off-line in the aftermath of Hurricanes Katrina and Rita.
Exxon Mobil Corp. said Monday it has restored about 80 percent of its oil and 85 percent of its gas production of its U.S. Gulf of Mexico production affected by the hurricanes, but about 20,000 barrels a day of gross oil production and 200 million cubic feet a day of gross natural gas volumes remain shut-in.
Vienna's PVM Oil Associates also pointed to the U.S. government's ongoing sale of a promised 30 million barrels in emergency stocks as putting a damper on prices.
Oil prices reached $70.85 a barrel on Aug. 30 after Hurricane Katrina made landfall, but have since declined 15 percent, apparently due to rising crude oil inventories and worries that fuel demand waned in the face of high prices.
But some analysts warned against placing too much weight on rising crude inventories coupled with declining demand, saying little improvement had been made to solve the fundamental problem of supply and refining capacity tightness.
"Even if oil demand growth remains weak in 2006, it is expected to grow faster than refining capacity, and that particular bottleneck in the supply chain is unlikely to disappear," the London-based Center for Global Energy Studies said in a report released Monday.
, sta roba qua non so proprio cossa che la sia, ho solo pensato che è sceso tanto, e che ai 'mericans i quartini piacciono...io preferisco quelli di rosso 
