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Oil trades near record after rising to $53
Crude oil futures were little changed after yesterday reaching a record $53 a barrel as Gulf of Mexico producers said damage from Hurricane Ivan may limit production until next year. Royal Dutch/Shell Group said two platforms struck by Ivan won't be fully operational until the first quarter of 2005. Production in the Gulf, source of a quarter of U.S. output, remains 28 percent below normal, the U.S. Minerals Management Service said. The reduction comes as refiners prepare to boost operating rates to meet winter demand for heating oil. "It's pretty clear the Gulf coast is going to be short of crude for the next few months," said Chris Mennis, owner of New Wave Energy in Aptos, California. "We've gone up $10 in a month. Can that continue next month and the month after that?" Crude oil for November delivery traded at $52.61 a barrel at 9:26 a.m. Sydney time, 6 cents lower than yesterday's record close of $52.67 on the New York Mercantile Exchange. Prices fell as low as $52.40 in after-hours electronic trading. Yesterday, November crude rose 65 cents, or 1.3 percent. Early in the session it reached $53, the highest since futures began trading in 1983. Oil gained in 14 of the past 16 sessions and is 76 percent higher than a year ago. "I see no sign of us approaching a top, which is scary," said Tom Bentz, an oil broker at BNP Paribas Commodity Futures Inc. in New York. "Production in the Gulf is out and Nigeria is becoming more of a worry. There continue be threats to supply in a market that just can't afford to have any reduction." Offshore Production Daily oil output at offshore platforms in the Gulf was down 475,176 barrels from 1.7 million before the storm, according to a report from the Minerals Management Service, part of the Interior Department. Ivan has reduced production by a total of 16.6 million barrels since Sept. 13. After Hurricane Andrew ravaged the Gulf of Mexico in August 1992, it took oil and natural-gas producers four months to restore production to 95 percent of the pre-storm level, according to the service. Royal Dutch/Shell Group said its Ram-Powell platform will return to 70 percent of pre-hurricane production in early December and 100 percent during the first quarter of 2005, spokesman Fred Palmer said in a phone interview from New Orleans. Shell's Main Pass 252 platform will resume oil and gas output "in early 2005," Palmer said. Two of Shell's subsea pipeline systems in the Gulf remain shut after the hurricane cracked the lines in three places, Palmer said. Bad Weather Approaches The Louisiana Offshore Oil Port, the biggest U.S. crude-oil import terminal, may have to close because of rough seas, a port official said. The port was shut from Sept. 13 to Sept. 18 and from Sept. 22 to Sept. 23 because of Hurricane Ivan. "We had to suspend operations for a little while earlier today because of a squall," said Mark Bugg, scheduling manager at New Orleans-based Loop LLC, the port operator. "The weather forecasts have us concerned and we are concerned that we won't be able to berth the ship scheduled on early Saturday." The facility, located about 20 miles off the Louisiana coast, handles about 1 million barrels of crude oil imports a day. It consists of mooring buoys, platforms and pipelines. The U.S. Energy Department has approved five oil loans totaling 4.7 million barrels from the nation's Strategic Petroleum Reserve since Ivan. The department has no additional requests from refiners under review, Energy Secretary Spencer Abraham said yesterday. Supply Lines "That may offer a little optimism for a relaxation in prices," New Wave's Mennis said. "If they're not asking for oil it may mean refiners have got their supply lines in place." President George W. Bush's plan to fill the reserve to its capacity has drawn criticism from Senator John Kerry from Massachusetts, Bush's Democratic rival in next month's Presidential election. "The Bush administration ought to have been a lot more aggressive about releasing oil from the SPR to keep prices in check," said George Gaspar, an energy analyst with Robert W. Baird & Co. in Milwaukee. "What's been released so far has been a mere pittance." Oil-tanker rates from the Middle East and West Africa surged to the highest in three decades, boosting earnings for Frontline Ltd. and Teekay Shipping Corp., the world's biggest tanker owners. Freight rates for 2-million-barrel tankers from the Middle East to Asia have more than doubled in less than a month as demand for shipping space outpaced capacity on offer. OPEC Output Saudi Arabia and other members of the Organization of Petroleum Exporting Countries are pumping oil at the fastest pace in 25 years to ease record prices, Bloomberg data showed. OPEC production has not kept up with soaring demand. The International Energy Agency has boosted its demand forecast every month from November 2003 through August 2004. Consumption will average 82.2 million barrels a day this year, a record 2.5 million barrel increase over last year, according to the Paris-based adviser to 26 oil-consuming countries. A Nigerian oil workers' union said it will strike at midnight Sunday unless President Olusegun Obasanjo's administration cuts fuel prices. Oil workers joined a strike in June that didn't reduce oil exports. Nigeria is the fifth-biggest source of U.S. oil imports. "A geopolitical disruption, stronger demand for diesel or a cold winter will send us to $60," said Carl Larry, an associate director of energy futures at Barclays Capital Inc. in New York. "If none of these occur, we still aren't going below the $46 to $48 range because of limited supply." |
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