|
Oil spurts as supply dries
|
 |
September 3, 1998: 5:32 p.m. ET
UN-Iraq saber-rattling, Russian crisis, rumored OPEC talks send crude up
|
NEW YORK (CNNfn) - An outpouring of signs that supplies have shrunk -- and may be cut even more -- sent crude oil futures sharply higher Thursday, with the near-month contract rising to its highest level in nearly two months.
The Nymex crude oil futures contract for delivery in October roared up $1 to settle at $14.67 a barrel, its highest closing price since July 16.
Sparking what amounted to a two-tiered bounce in prices, crude oil rose early amid lingering fears that Russian exports might be disrupted. Last week exports from two ports in Russia were briefly halted due to problems linked to the payment of customs duties.
While that helped lower prices in the physical market for crude oil, analysts said, a cloud of uncertainly still hovers amid economic and political jitters about Russia - leading to the gains in the futures market.
"The government is trying to collect overdue taxes from oil companies to recover some lost taxes," said Antoine Halff, a correspondent for the newsletter Petroleum Intelligence Weekly. "And there is still some confusion about the government being in crisis."
After hitting a plateau in mid-day trading, crude prices got a second wind after reports surfaced that Iraq imposed further restrictions on inspections by United Nations weapons inspectors.
That came as the United States and Britain dug in their heels. The two Security Council members sent forward a draft resolution that would suspend the review of Iraqi sanctions - which could lead to the lifting their lifting - if Iraqi doesn't cooperate more fully with inspectors.
Meanwhile, analysts cited rumors that big producers Venezuela and Saudi Arabia may be preparing another round of meetings to find a way to cut output further.
On three occasions earlier this year, OPEC agreed to cut its output. While some analysts were skeptical the oil cartel's members would hold to those cuts, one analyst said the cartel's members held to the accord relatively well last month.
"Apparently it was that the OPEC cuts in August were about 85 percent of what was planned," said Arvind Sanger, an oil analyst at Donaldson, Lufkin & Jenrette. "There had been some skepticism about that."
U.S. refinery production was delayed last week as a Tropical Storm Earl forced some drilling in the Gulf coast to be shut down. Halff said an estimated 800,000 barrels a day were lost in production because of the storm. And the bullishness was compounded by output concerns lingering in Nigeria.
Even further in the background was a dip in the U.S. dollar versus the Japan's yen and the German mark, which analysts said may have provided a modest bounce on the demand side.
Because crude oil is priced in dollars, a stronger home currency in places like Japan and Germany means the nations can get more crude oil for each yen or mark they spend. 
by staff writer Jamey Keaten
|
|
|
|
|
 |
|
