Thursday, October 26, 2006

Crude oil prices rose Thursday a day after jumping more than US$2 a barrel in response to a report that showed U.S. inventories dropped last week. OPEC's steps to cut production and attacks by Nigerian villagers on oil facilities also contributed to the increase.


Light, sweet crude for December delivery was up 25 cents to US$61.65 a barrel in Asian electronic trading on the New York Mercantile Exchange.

Though global oil supplies are still relatively ample and some skepticism remains about OPEC's willingness to go through with the 1.2 million barrel-a-day reduction it announced late last week, traders were betting on tightening supplies going into the winter, when fuel demand ramps up.

Heating oil futures rose nearly half a cent to $1.7435 a gallon (3.8 liters) on the Nymex, while gasoline futures dropped marginally to $1.5920 a gallon (3.8 liters).
Crude oil stockpiles fell by 3.3 million barrels to 332.3 million barrels in the week ending Oct. 20, the U.S. Energy Department's Energy Information Administration said Wednesday.

Distillate stocks, which include heating oil and diesel fuel, fell by 1.4 million barrels to 144 million barrels, and gasoline supplies dropped by 2.8 million barrels to 207.4 million barrels.
Crude stocks declined last week largely because of a 936,000-barrel decrease in imports from the previous week.

Oil prices had fallen to an 11-month low below US$57 a barrel Friday — even after the 11-member Organization of Petroleum Exporting Countries decided to reduce its daily production by a larger-than-anticipated amount of 1.2 million barrels — amid doubts about the cartel's ability to implement the decision to cut daily production.

But prices have bounced back up above US$60 a barrel after reports this week that so far, Saudi Arabia, the United Arab Emirates and Iran have begun informing customers that they are going through with the cuts, according to Dow Jones Newswires.

Meanwhile in Nigeria Wednesday, angry villagers stormed and seized three Royal Dutch Shell PLC oil platforms in the Niger Delta, forcing oil production to be shut down at each one, a spokesman for the oil company said.

Royal Dutch Shell officials declined to say how much oil had been cut off after the platforms were attacked. Attacks by armed militants in Nigeria have cut more than a quarter of the country's oil exports since the beginning of this year.
In other trading, natural gas futures rose 8.8 cents to $7.781 per thousand cubic feet. The contract has risen about US$2 in two weeks.