THE NEW YORK TIMES: Crude Futures Hover Near $50 a Barrel: “In Nigeria, Oil giant Royal Dutch/Shell Group opened a court action Monday to try to block a strike targeting oil exports. It failed in a first-round bid to block wildcat strikes or other union action in the meantime. The case came one day after Nigeria's unions called the Nov. 16 strike over rising fuel prices and promised to target Shell. Purvin & Gertz oil analyst Ken Miller said the potential loss of production in Nigeria, which pumps the light, sweet crude most desired by refiners, is ``a real concern.'' (ShellNews.net)
By THE ASSOCIATED PRESS
Published: November 2, 2004
Crude oil futures settled below $50 a barrel Tuesday, falling to their lowest closing level since the end of September, as fears about heating oil subsided even though inventories remain tight.
The decline in oil prices over the past week continued in spite of persistent uncertainty about international oil output, with a strike looming in Nigeria and saboteurs attacking pipelines in Iraq.
Market jitters have subsided slightly due to an improving picture in the Gulf of Mexico, where fallout from Hurricane Ivan has knocked out nearly 27 million barrels of crude production since mid-September.
Globally, the oil supply chain is operating with a thin margin for error and that is the underlying reason that prices are more than 70 percent higher than a year ago, analysts say.
Light crude for December delivery settled down 51 cents at $49.62 on the New York Mercantile Exchange.
Heating oil was down 1.76 cent at $1.39 per gallon in afternoon trading, while natural gas was down 15 cents at $8.57 per 1,000 cubic feet. Gasoline futures traded at $1.287 per gallon, down less than a penny.
Brent crude for December delivery was down 21 cents at $46.85 on the International Petroleum Exchange in London.
Alaron Trading Corp. analyst Phil Flynn said the sharp drop in prices from a week ago was due to expectations that the nation's heating oil supply would soon begin to build to more comfortable levels.
``We were a little ahead of ourselves at $55 and we've corrected a little bit,'' said Flynn. A record Nymex closing price of $55.17 per barrel was reached Oct. 22 and matched four days later.
Crude futures prices would need to surpass $90 per barrel to approximate the all-time high, in inflation-adjusted terms, set in 1980.
Analysts and traders monitored the U.S. presidential elections Tuesday, with incumbent Republican George W. Bush and Democrat challenger Senator John Kerry offering up differing views on how to use Washington's massive oil reserves. Kerry has long urged Bush to make reserves available to reduce prices.
In 2001, Bush ordered the Strategic Petroleum Reserve -- in underground caverns in Texas and Louisiana -- stockpiled to 700 million barrels. It is currently at 670 million barrels and Kerry has said he had plans to stop filling the reserve.
Traders also paused ahead of Wednesday's release of the U.S. Department of Energy's weekly petroleum supply report. Last week, oil prices tumbled from record levels on Nymex after the agency said U.S. crude supplies had increased by 4 million barrels to 283.4 million barrels -- roughly double what Wall Street was expecting.
Distillate stocks, which include heating oil and diesel, however, remain a concern. They have fallen for six consecutive weeks and remain woefully below expected levels prior to the Northern Hemisphere winter.
Oil prices rose steadily between mid-September and mid-October after Hurricane Ivan caused production outages in the Gulf of Mexico. But the U.S federal Minerals Management Service said Monday oil production in the Gulf of Mexico was back up to 87 percent of normal daily levels.
In northern Iraq on Tuesday, assailants blew up an oil pipeline though it was not immediately clear if exports were affected.
Iraq's oil industry, which provides desperately needed money for postwar reconstruction efforts, has been the target of repeated attacks by insurgents.
In Nigeria, Oil giant Royal Dutch/Shell Group opened a court action Monday to try to block a strike targeting oil exports. It failed in a first-round bid to block wildcat strikes or other union action in the meantime.
The case came one day after Nigeria's unions called the Nov. 16 strike over rising fuel prices and promised to target Shell.
Purvin & Gertz oil analyst Ken Miller said the potential loss of production in Nigeria, which pumps the light, sweet crude most desired by refiners, is ``a real concern.''
``It's not even so much speculative,'' he added. ``It's just a risk.''
Global daily demand surged this year by about 2.8 million barrels to 82.4 million barrels, leaving only 1 million barrels a day of excess available production. That's anywhere from one-third to one-fifth of the buffer the industry had been accustomed to over the prior decade.
http://www.nytimes.com/aponline/business/AP-Oil-Prices.html