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U.S. crude products surge: Rally in gasoline futures, jitters over weather, terrorism OPEC members say cartel unlikely to increase production when it meets in December, tolerating overproduction by members to ward off future crude supply disruptions by The Associated Press
Crude oil futures soared above $30 a barrel Oct. 14 on a combination of factors, including a rally in gasoline futures. On the New York Mercantile Exchange, nearby November crude oil futures gained 66 cents to settle at $30.03 a barrel.
November heating oil rose 1.92 cents to close at 80.89 cents a gallon, while the November gasoline futures contract surged 2.95 cents to close at 84.96 cents a gallon.
On London’s International Petroleum Exchange, November Brent jumped 51 cents to close at $28.50 a barrel.
Gasoline futures surged early amid talk of heavy refinery buying in the cash market.
Natural gas for November delivery rose 15.7 cents to close at $4.303 per 1,000 cubic feet.
On the Gulf Coast, the cash price of gasoline rose amid thin buying by refiners, traders said.
The result was a powerful rally in Nymex gasoline futures, which in turn helped push up the rest of the petroleum complex, analysts said.
Terrorism a concern In addition to the gasoline rally, crude futures received support from fresh jitters of terrorism and news of a tropical depression gathering strength over the Caribbean.
President Bush said Oct. 14 that there is a “pattern of attack” by al-Qaida in Kuwait, Indonesia and Yemen, raising concern that terrorists are on the move again and could strike the United States.
The comments came after a weekend bombing in Bali, Indonesia, left more than 180 people dead at a nightclub.
The Indonesia bombing, recent attacks on U.S. troops in Kuwait and the bombing of a French oil tanker off the coast of Yemen last week are the clearest indications that terrorists are regrouping and could attack the United States again, analysts said.
“It’s become a lot harder to take a short position in this kind of environment, especially when you realize that oil tankers and infrastructure obviously are going to be a target of choice for these terrorists,” said Phil Flynn, an energy trader and analyst at Alaron Trading Corp. in Chicago.
Weather also a factor Meanwhile, traders were eyeing a tropical depression as it gathered strength over the northwest Caribbean.
Tropical Depression 14 had maximum sustained winds of 30 miles per hour Monday and was centered 150 miles southwest of Grand Cayman Island.
Traders worry that a full-blown tropical storm could threaten oil production in the Gulf of Mexico.
Just a couple of weeks ago, Tropical Storm Isidore and, subsequently, Hurricane Lili, halted Gulf of Mexico production and disrupted imports into the Gulf Coast region.
The effect on oil inventories was severe. In two weeks, crude oil stocks shrank by nearly 19 million barrels and plunged to their lowest level since 1976, the American Petroleum Institute reported last week.
Inventories expected to recover Analysts expect inventories to recover a bit as imports return to normal.
On average, analysts expect the report to show a build of 3 million barrels in crude stocks for the week ended Oct. 11, according to a Dow Jones Newswires survey of analysts.
The analysts also projected a decline of about 500,000 barrels in distillate stocks, which include heating oil and diesel fuel, and a draw of 1.8 million barrels in gasoline.
Meanwhile, Algerian Oil Minister Chakib Khelil said the Organization of Petroleum Exporting Countries is “unlikely” to hike output quotas when the group meets in December.
Separately, OPEC President Rilwanu Lukman said OPEC is tolerating overproduction by individual members as a way of warding off any future supply disruptions in the oil market. Industry sources estimate OPEC overproduction at about 2 million barrels a day.
“We don’t hamstring our members,” Lukman said outside a conference in Doha, Qatar. “We allow members to take the initiative which was intended to secure the market.”
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