Sun, Nov 25, 2007 - Page 10 News List

OIL: Oil futures rise to close at record high

FORTUNE FOR FUEL Oil prices have risen 43 percent between August and the early part of this month on, among other factors, concerns about disruptions to supply

AP , NEW YORK

Oil futures resumed their march toward US$100 a barrel on Friday, rising to a new record close in light holiday trading on concerns about tight heating oil stocks, while also drawing support from a buoyant equity market.

Light, sweet crude for January delivery rose US$0.89 to settle at US$98.18 a barrel on the New York Mercantile Exchange, besting the previous settlement record by US$0.15, while December heating oil futures rose US$1.68 to settle at US$2.7042 a gallon after earlier setting a new trading record of US$2.7181 a gallon.

In London, January Brent crude rose US$1.26 to settle at US$95.76 a barrel on the ICE Futures exchange.

Nymex crude prices reached a trading record of US$99.29 a barrel on Wednesday, and are within the range of inflation-adjusted highs set in early 1980. Depending on how the adjustment is calculated, US$38 a barrel then would be worth US$96 to US$103 or more today.

Heating oil prices are rising due to falling supplies at home and overseas, analysts said.

"The heating oil market, it's more of a global story," said Andrew Lebow, senior vice president of MF Global Inc in New York. "Because of refinery problems in Europe, [supplies] are kind of tight."

Energy futures also drew support from Friday's rise in the stock market. Energy investors often view stocks as a proxy for the economy's strength, betting that a stronger economy will use more oil and gasoline.

Oil traders shrugged off data suggesting OPEC is increasing production more quickly than expected. Oil Movements, an oil tanker tracking firm based in the UK, reported that OPEC oil exports are likely to jump by an average of 720,000 barrels a day in the four weeks ended Dec. 8, more than the expected 500,000 barrels per day.

Oil prices rose 43 percent between August and early this month on falling domestic inventories, concerns about supply disruptions overseas and, many analysts argue, speculative buying. But recent forecasts have suggested high prices are cutting demand. The inventory picture has become cloudy, too.

Two weeks ago, domestic oil inventories rose unexpectedly. Last week, supplies fell more than expected, but rose at the Nymex delivery point in Cushing, Oklahoma. Falling supplies at the terminal are seen as a symptom of a tight market, but last week's gain in Cushing supplies eased those concerns.

In other Nymex trading on Friday, December gasoline rose US$2.99 to settle at US$2.467 a gallon while December natural gas rose US$0.15 to settle at US$7.70 per 1,000 cubic feet.

Analysts warned that the thin trading volumes on a Thanksgiving holiday-shortened trading day exaggerated the effect of each trade.

"Given the thin trade, any minor bullish headlines will be capable of spiking this market to the upside," said Jim Ritterbusch, president of Ritterbusch & Associates, in Galena, Illinois, in a research note.

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