poo news

Crude price jumps as stockpiles fall

By Kevin Morrison

Published: July 14 2004 12:18 | Last Updated: July 14 2004 20:33


Crude oil futures rose sharply yesterday after the weekly US commercial crude inventory report showed a fall in both crude oil and gasoline inventories and the FBI warned of possible terrorist attacks on energy facilities.


August Nymex WTI settled $1.53 higher at $40.97 a barrel in New York after topping $41.00 before the close.

IPE Brent for August delivery gained $1.85 to $38.54 a barrel in London, extending the 6 cents gain from the previous session.

The Energy Information Administration, the statistical arm of the US energy department, said US crude oil inventories fell by 2.1m barrels in the latest week, despite US crude imports averaging more than 10m barrels a day for the eighth consecutive week, the longest period ever that imports have remained at this level.

The jump in crude prices also followed a report that FBI had last week warned US law enforcement agencies that "recent terrorist attacks and incidents occurring overseas highlight terrorists' interests in targeting energy-related infrastructures."

The rise in Saudi Arabian oil production in May and June was starting to hit the US shores, the EIA said, and preliminary reports showed Saudi Arabia was the top source of oil last week.

The latest report was another confirmation of strong US demand, with inventories failing to rise significantly despite a near 3 per cent rise in total product supplied over the last four-week period compared with a year earlier. Gasoline demand was up 1 per cent in the period year-on-year, and distillate and jet fuel demand was up between about 5 and 7.6 per cent.

A report by the National Petrochemical & Refiners Association, the industry body for US refiners, showed refining capacity had failed to keep up with demand.

The report said US refining capacity for all petroleum products had risen by 0.6 per cent per year since 2000. The increase in gasoline use, which accounts for half of US oil consumption, has risen at 2 per cent a year over the same period.
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OPEC member Venezuela accused the Paris-based International Energy Agency of damaging its reputation as a reliable oil supplier by questioning Venezuela’s crude production figures.


Energy Minister Rafael Ramirez insisted that Venezuela, the world’s fifth-largest oil exporter, is producing 3.1 million barrels of crude a day, exceeding its OPEC quota of 2.9 million barrels per day. It also provides about 14% of US oil supplies.

Private analysts have suggested that Venezuela has inflated production figures since an oil workers strike in December 2002-February 2003 that failed to oust President Hugo Chavez.

In a sharply worded statement, Ramirez said late yesterday that “the International Energy Agency is, precisely, our opponent in OPEC.”

“It is an association of consuming nations, it represents the interests of the great societies and consuming countries and, of course, it always carries out a strategy of weakening the producing countries and OPEC,” Ramirez said.

The IEA is the energy watchdog for wealthy oil-importing countries. Although it generally avoids forecasting prices, it suggested strongly yesterday that there was little reason for consumers to expect lower prices any time soon, partly because of uncertainties about supplies from Iraq, Nigeria and some other large producers.

Venezuelan newspapers quoted IEA director Klaus Rehaag as saying that Venezuela’s oil industry was suffering from political instability and lack of investment.

The IEA was not immediately reachable for comment on Ramirez’s statement.

Analysts have said that production is closer to 2.5 million barrels a day. They cite alleged lack of investment after the strike and lost expertise.

Chavez consolidated government control of the semiautonomous state oil monopoly Petroleos de Venezuela SA by dismissing half its 38,000-strong work force during the strike. His government insists that it has become a more streamlined and efficient enterprise.

Venezuela earned more than 20 billion US dollars (£10.8billion) in oil revenues last year and has benefited from high oil prices this year.

PDVSA has created a 2 billion US dollars (£1.08billion) fund to pay for a host of government social programs under Chavez, who faces a recall referendum on August 15. All of PDVSA’s foreign income used to go directly to the Central Bank.