Sun, Oct 30, 2005 - Page 10 News List

Oil still above US$60 as supply concerns persist

WINTER COMING Traders kept oil at high levels as worries mounted that Gulf of Mexico supplies won't be back online in time to help provide heating oil

AP , NEW YORK

Oil prices held above US$61 a barrel on Friday amid lingering concerns that US Gulf of Mexico oil facilities recovering from hurricane damage will struggle to meet heating-oil demand as the Northern Hemisphere winter approaches.

Light, sweet crude for December delivery rose US$0.13 to settle at US$61.22 a barrel on the New York Mercantile Exchange. In London, December Brent rose US$0.28 to settle at US$59.42 a barrel on ICE Futures, formerly the International Petroleum Exchange.

Concern is growing among traders that damage caused by hurricanes Katrina and Rita will hurt already aging US refineries' efforts to gear up for the winter, the peak season for production of distillate stocks -- fuels that include heating oil, jet fuel, kerosene and diesel oil.

The US government said on Thursday that 68 percent of daily oil production and 56 percent of daily gas production in the Gulf of Mexico remained shut down in the wake of the hurricanes.

US supplies of distillate fuel shrank by 1.6 million barrels to 121.1 million barrels, their seventh decline in two months, the US Energy Department said in its midweek report.

Nymex heating oil futures fell US$0.01104 to US$1.8435 a gallon, while gasoline futures climbed US$0.0316 to US$1.6242 per gallon.

China, the world's second largest oil-consumer after the US, reported Friday that it imported 4.8 percent more crude oil last month compared with a year ago.

China imported 76 million barrels during the month, or an average of 2.65 million barrels a day, data issued Friday by the General Administration of Customs showed.

"The pace of demand growth in China is something we are all watching, because it will have a greater effect on crude oil demand-supply balance at some stage," said chief commodities strategist Tetsu Emori of Mitsui Bussan Futures in Tokyo.

Oil prices are 14 percent below the late August peak of US$70.85 a barrel, when Katrina made landfall.

But natural gas futures have nearly doubled compared to a year ago and are expected to produce huge heating bills this winter across much of the US.

US lawmakers on Thursday urged the Bush administration to open an area of the eastern Gulf of Mexico to natural gas development, arguing that just an announcement of this new supply of gas might help stabilize or reduce natural gas prices.

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