Crude Oil Steady After Tropical Storm Gustav Forms in Caribbean
By Christian Schmollinger
Aug. 26 (Bloomberg) -- Crude oil was little changed after rising yesterday as Tropical Storm Gustav formed in the Caribbean Sea, raising concern it may disrupt production at oil fields in the Gulf of Mexico.
Gustav has strengthened to near-hurricane force with winds of about 70 miles (110 kilometers) an hour and was moving toward the Gulf, a National Hurricane Center advisory showed at 11 p.m. New York time. Prices also rose after Russian lawmakers voted to recognize the independence of two breakaway Georgian regions, increasing the prospect of tensions in the area.
``Prices were pushed higher by the storm but before we confirm the impact it's difficult to know for sure,'' said Tetsu Emori, a fund manager with Astmax Co. in Tokyo. ``The geopolitical tensions between the U.S. and Russia and even the EU are going to be a problem.''
Crude oil for October delivery was at $115.35 a barrel, up 24 cents, at 12:13 p.m. Singapore time on the New York Mercantile Exchange. Prices are up 60 percent from a year ago. Yesterday, futures rose 0.5 percent to settle at $115.11.
Brent crude oil for October settlement was at $114.35 a barrel, up 32 cents, on London's ICE Futures Europe exchange at 12:11 p.m. Singapore time. It rose 11 cents to $114.03 a barrel yesterday. Trading hours weren't affected by yesterday's U.K. bank holiday.
Gustav was located about 150 miles (240 kilometers) south- southeast of Port-au-Prince, Haiti, and was moving northwest at about 12 miles an hour, according to the Hurricane Center. Fields in the Gulf of Mexico account for about 20 percent of U.S. oil output.
BTC Resumes
Both houses of Russia's Parliament voted to recognize the independence of South Ossetia and Abkhazia, the two regions that sparked Russia's first foreign incursion since the Soviet era.
The Baku-Tbilisi-Ceyhan pipeline, which transports oil from Azerbaijan through Georgia to Turkey's Mediterranean coast, resumed oil flows.
The loadings followed repairs and testing after the pipe was closed on Aug. 5 when an explosion sparked a blaze on the 1,768-kilometer (1,100-mile) pipeline. The BTC carries as much as 1 million barrels of Azeri crude each day through Georgia to Turkey's Mediterranean coast.
Azerbaijan sent oil to export via Iran because of the disruption, with Iranian Oil Terminals Co. receiving the first cargo for transit Aug. 24, according to the Iranian Oil Ministry's news agency, Shana. Iran can handle 200,000 barrels a day of Caspian and Central Asian crude and could boost the volume to 500,000 barrels daily under swap agreements, Shana said on its Web site. It didn't specify how much Azeri crude Iran received.
Iran Urges Cuts
Iran may urge OPEC to cut oil production to support crude prices after a decline of more than $30 a barrel since last month, the country's Oil Ministry said.
``The issue of surplus oil in the market and the control of prices are among the serious themes of the coming OPEC meeting,'' Oil Minister Gholamhossein Nozari said in a Shana report. ``It appears that OPEC members plan to prevent the decreasing trend of oil prices,'' Nozari said.
Members of the Organization of Petroleum Exporting Countries, which contributes more than 40 percent of the world's oil, are scheduled to meet on Sept. 9 in Vienna to review output targets.
``The OPEC meeting won't be that important,'' said Astmax's Emori. ``Each country is going to be making its own policy on production. The group won't change the production at the meeting but the countries will make cuts on their own.''
U.S. Inventories
U.S. crude-oil inventories probably rose last week because refinery operations are lower than in previous years, a Bloomberg News survey of analysts showed.
Refineries probably operated at 86.2 percent of capacity in the week ended Aug. 22, up 0.5 percentage point from the week before. The hypothetical profit margin, or crack spread, for refining crude oil for October delivery into gasoline was $2.838 a barrel today, down 47 percent from a week ago.
Inventories of crude oil probably rose 1.1 million barrels last week from 305.9 million, according to the median of responses by five analysts before an Energy Department report this week.
Gasoline stockpiles probably fell 3.4 million barrels from 196.6 million barrels the week before, the survey showed. Inventories of distillate fuel, including heating oil and diesel, probably declined 800,000 barrels from 132.1 million barrels.
To contact the reporter on this story: Christian Schmollinger in Singapore at christian.s@bloomberg.net.
Source: http://www.bloomberg.com/apps/news?pid=20601091&sid=aa.foPXDoG9o&refer=india
Last Updated: August 26, 2008 00:20 EDT