Crude Oil Rises to 11-Month High

Crude Oil Rises to 11-Month High as North Sea Production Drops
By Mark Shenk
July 13 (Bloomberg)

Crude oil rose to an 11-month high in New York and London after a pipeline shutdown and maintenance work reduced North Sea Brent oil production.

Chevron Corp. and ConocoPhillips said they lost output from North Sea fields that produce oil and gas after BP Plc closed the pipeline. BG Group Plc said its Armada oil field in the North Sea has been shut for maintenance since June. The International Energy Agency said in a report today that global oil demand will rise 2.5 percent next year.

``Obviously, Brent is the leader,'' said Nauman Barakat, senior vice president of global energy futures at Macquarie Futures USA Inc. in New York. ``It looks like 150,000 barrels a day are being lost because of the pipeline problems in the North Sea, which is giving Brent a boost.''

Crude oil for August delivery rose $1.43, or 2 percent, to settle at $73.93 a barrel at 2:50 p.m. on the New York Mercantile Exchange. It was the highest close since Aug. 11 and the biggest one-day gain since June 14. Oil rose 1.5 percent this week.

New York crude is down 3.6 percent from a year ago, when prices were approaching a record $78.40 a barrel reached July 14, 2006, on concern fighting in Lebanon between Israel and Islamic militia Hezbollah would spread through the Middle East.

``This is largely a technical move,'' said Peter Beutel, president of Cameron Hanover Inc., a New Canaan, Connecticut, energy consultant. ``We're headed for the $75 to $77.50 area where there is a lot of resistance. If we can breach that level there will be an assault on the old high of $78.40.''

Brent Crude Oil

Brent crude oil for August settlement increased $1.17, or 1.5 percent, to close at $77.57 barrel on the London-based ICE Futures exchange. It was the highest settlement price since Aug. 7, when prices closed at a record $78.30.

World oil demand will rise 1.8 percent this year, according to the IEA. Demand next year will be led by accelerating consumption growth in China and the Middle East. The agency lowered its 2007 demand estimate by 100,000 barrels a day since its previous report a month ago. The Paris-based agency is an energy adviser to 26 industrialized countries.

``The IEA is looking for strong growth next year,'' said Michael Lynch, president of Strategic Energy & Economic Research in Winchester, Massachusetts. ``They revised some recent demand estimates lower but not by enough to excite anyone.''

Iranian Inspection

Iran will allow United Nations inspectors to visit a reactor under construction that could produce plutonium, the UN's International Atomic Energy Agency said today. The agreement came during discussions this week in Tehran between Ali Larijani, the country's security chief, and Olli Heinonen, the nuclear agency's deputy director-general.

Iran, which holds the world's second-largest oil and natural gas reserves, says it wants to enrich uranium for use in nuclear power plants to produce electricity. The U.S. says Iran seeks instead to develop an atomic bomb. The dispute has bolstered oil prices since January 2006 because of concern that oil shipments from the country might be cut.

``Iran has recently been off the radar but if the inspections go well we may see prices retreat below $70,'' Lynch said.

Crude oil prices have also risen on concern that shipments from Nigeria and Iraq have been disrupted because of attacks on facilities. Venezuelan production has slipped as the country nationalized heavy oil production ventures this year.

``I am surprised by today's movement because today's news from Iran is the most positive we've seen in years,'' Beutel said. ``The situation in Nigeria is still a major concern, the Venezuelan saga continues and now there's even trouble in Ecuador.''

Crude Oil Drops More Than $2.50 a Barrel

By Mark Shenk
April 9 (Bloomberg)

Crude oil plunged more than $2.50 a barrel in New York, the biggest decline in three months, on speculation that an Energy Department report will show U.S. inventories jumped last week as refiners unexpectedly shut units.

Crude-oil supplies in Cushing, Oklahoma, where oil traded in New York is delivered, surged 12 percent in the week ended March 30, Energy Department figures show. Fires and power outages have forced refiners to shut units, reducing crude-oil demand. Oil prices also fell because release of British naval personnel on April 5 eased concern of a supply disruption in the Persian Gulf.

``Crude oil is pulling everything lower,'' said James Ritterbusch, president of Ritterbusch & Associates in Galena, Illinois. ``It looks like we will see record inventories in Cushing this week because of all of the refinery outages.''

Crude oil for May delivery fell $2.77, or 4.3 percent, to $61.51 a barrel at the 2:30 p.m. close of floor trading on the New York Mercantile Exchange. The contract is heading for the biggest one-day decline since Jan. 4. Futures touched $68.09 a barrel on March 27, the highest since Sept. 6. Prices are down 8.7 percent from a year ago. Xxx

``The continuing spate of refinery outages and maintenance issues is pushing product prices higher and putting downward pressure on crude,'' said Eric Wittenauer, an energy analyst at A.G. Edwards & Sons Inc. in St. Louis. ``Until you see an up-tick in refinery operations, crude oil will have a hard time rising.

Motiva Enterprises LLC, the refining joint venture between Europe's Royal Dutch Shell Plc and Saudi Arabia's state oil company, reported a malfunction that occurred yesterday at its plant in Port Arthur, Texas. The Port Arthur refinery has a daily processing capacity of 285,000 barrels.

The profit margin, or ``crack'' spread, for turning three barrels of crude oil into two barrels of gasoline and one of heating oil jumped 5.5 percent to $22.546, the highest since Sept. 29, 2005, based on closing futures prices in New York.

Refineries in Texas, California, Pennsylvania, Colorado, Ontario and Delaware have had to trim output over the past two months. The closure of Valero Energy Corp.'s McKee refinery near Sunray, Texas, has contributed to the increase in supplies in Cushing. Increasing stockpiles in this oil hub have depressed the price of oil in New York compared with Brent oil.

``Prices here are depressed because the tanks in Cushing are full as a result of refinery problems,'' said Michael Lynch, president of Strategic Energy & Economic Research in Winchester, Massachusetts. ``There's nowhere to put the oil. If someone could figure a way to ship the oil stuck in Cushing to the U.K. they would make a fortune.''

Uranium Enrichment

Iranian President Mahmoud Ahmadinejad said today that his country has begun enriching uranium on an industrial scale, stepping up defiance against the United Nations.

``Iran has succeeded in the nuclear-fuel-cycle development to attain production at an industrial level,'' Ahmadinejad said today at a ceremony at the Natanz uranium-enrichment site. He repeated that nuclear-fuel production was Iran's ``undeniable right'' and referred to ``a few powerful governments imposing their will on the rest,'' according to a broadcast of the speech.

The United Nations Security Council gave Iran 60 days from March 24 to suspend enrichment. The country already has ignored three UN deadlines to shut down production of the nuclear fuel. The UN demands were in response to allegations by the U.S. and some of its allies that Iran is using the development of nuclear power to disguise a weapons program. Iran denies that.

Price Swings in Crude Oil Widening

Feb. 20 (Bloomberg) -- Crude oil was little changed after falling yesterday as warmer weather moved into the eastern U.S. and Europe, curbing heating-fuel consumption.

Daily price swings in crude oil futures are widening. Futures fell or rose more than 1.5 percent on 26 trading days in the past two months compared with 15 days in the same period a year earlier, according to data compiled by Bloomberg.

Heating Season Ends

``The warmer weather is concentrating minds on the fact that the end of heating season is near,'' said Michael Lynch, president of Strategic Energy & Economic Research in Winchester, Massachusetts. ``Crude-oil supplies should build in the next couple of months as refineries perform maintenance.''


Iran, the world's fourth-largest oil producer, has the ``right'' to pursue its nuclear program, Iranian President Mahmoud Ahmadinejad said yesterday, rejecting the request of a United Nations Security Council to halt uranium enrichment by today.

U.S. Buildup

The Security Council unanimously voted Dec. 23 to impose sanctions on Iran over the program, including a ban on the acquisition of materials and technology that might be used to build nuclear weapons. The UN also froze the assets of individuals and groups associated with the program and gave Iran 60 days to halt enrichment.

A U.S. aircraft carrier battle group led by the USS John C. Stennis arrived in the Persian Gulf region as part of a buildup of forces amid heightened tension with Iran. The Nimitz-class Stennis arrived in the region Feb. 15 to join the USS Dwight D. Eisenhower as the second aircraft carrier battle group in the region, the U.S. Navy's Fifth Fleet said yesterday.