oil climbs to $50.25 - weigh global supply threats Oil tops $50, trades near 3-week high
Global supply threats, possible OPEC output cut weighed
By Myra P. Saefong, CBS.MarketWatch.com - Last Update: 11:32 AM ET Nov. 23, 2004
SAN FRANCISCO (CBS.MW) -- Crude-oil futures climbed above $50 a barrel Tuesday to trade at their highest level in nearly three weeks with traders still nervous about the overall picture for worldwide petroleum supplies ahead of the Thanksgiving holiday and this week's U.S. inventory updates.
"The issues facing the oil markets aren't going away anytime soon and it's a long laundry list of worry," said Phil Flynn, a senior analyst at Alaron Trading in Chicago. "Geopolitical troubles are front and center, and the continuing issues of old fashioned supply and demand are ever present," he said.
At last check, crude for January delivery rose to a high of $50.25 a barrel on the New York Mercantile Exchange -- a level not seen since Nov. 4. It was last at $50.20, up $1.56, or 3.2 percent.
December heating oil followed suit to trade at $1.478 a gallon, up 3.31 cents, and December unleaded gasoline stood at $1.3215 a gallon, up 3.21 cents. Saudi Arabia and the United Arab Emirates said Monday that supply was good and prices were too high, said Michael Cavanaugh, an analyst at brokerage MyFuturesOnline.com. That implies that OPEC may agree to cut production at its next meeting on Dec. 10 in Cairo. The comments follow last week's statement from Venezuela which said it supports an Iranian proposal to cut oil output to support prices. OPEC's production quota, which excludes Iraq, is currently 27 million barrels.
But "seeing OPEC wait until the Dec. 10 meeting to change production levels probably means that the oversupply situation will be allowed to continue through most of the slack demand period," said John Kilduff, an analyst at Fimat USA. Still, at the same time, Chinese imports were up 33 percent in October -- "this seemed to be one of the main catalysts that got us over $50 a barrel in the first place," said Cavanaugh.
Meanwhile, the Russian government is set to go ahead with its plan to sell 76.8 percent of the production unit of oil giant Yukos (YUKOF: news, chart, profile) next month as part of attempts to claim billions of dollars in back taxes. The unit pumps about 1 million barrels per day. The China National Petroleum Corp. may be interested in bidding on the Yukos subsidiary, according to IFR Markets, which cited a report from a Russian daily newspaper Tuesday.
In Iraq, repairs on a southern Iraqi oil pipeline system may take a week following an explosion Monday that was reportedly due to corrosion, not terrorism, according to IFR senior analyst Tim Evans. Exports through the pipeline were cut by 750,000 barrels per day to 1 million barrels on Monday, he said.
