Oil prices hit another record

New York’s benchmark light sweet crude for delivery in November set a record 54.88 US dollars a barrel before finishing at a record high closing price of 54.76 dollars, up 1.12 dollars on the day.

Brent North Sea hit a high of 50.90 dollars and closed at 50.84 dollars, up 79 cents.

News of a sharp drop in US commercial heating oil inventories frightened the market higher, said Refco market analyst Marshall Steeves.

“A lot of the private forecasters are predicting a cold winter. It remains to be seen whether that is the case. In any case, distillate stocks are down at the lower end of the historical range,” he said.

Commercial crude oil inventories in the week to October 8 surged 4.2 million barrels from the previous week to 278.2 million barrels, at the lower end of average for this time of year, the Energy Department report said.

But distillates, mostly diesel and heating oil, dropped 2.5 million barrels to 120.9 million, showing the effect of production and refinery problems in the Gulf of Mexico because of hurricanes.

Heating oil inventories, in high demand in the northern hemisphere winter, declined 1.2 million barrels to 50.0 million. Diesel fell 2.1 million barrels to 68.2 million.

Heating oil prices surged five cents to a record high finish of 1.5491 dollars a gallon.

“The figures are extremely bullish,” said Societe Generale analyst Deborah White in Paris.

“The key figure for the market is this 2.5-million-barrel draw in distillates that was evenly split between diesel and heating oil,” she added.

Although crude oil stocks climbed by 4.2 million barrels, there was only a modest rise in sought-after light sweet crudes such as West Texas Intermediate and Brent, which are stored in the Atlantic basin.

And this rise was the result of a loan of oil to refiners from the US Strategic Petroleum Reserve, an emergency supply which is excluded from the Energy Department’s stock figures.

Meanwhile traders shrugged at news that in Nigeria labour leaders and opposition activists were expected to suspend a nationwide general strike.

“The strike is still on,” said Owei Lakemfa, chief spokesman for the Nigeria Labour Congress.

Meanwhile OPEC’s president predicted that oil prices would continue to rise in the next two weeks on the back of a surge in demand.

World oil prices have more than doubled from about 20 dollars a barrel in New York at the start of 2002, surging by about 65 percent since the start of this year.

Adjusted for inflation, however, they remain far below the levels reached in the wake of the 1979 Iranian revolution when prices surged to upwards of 80 dollars a barrel in today’s money.

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