US oil prices roared to their highest close in more than 13 years on Wednesday as a drop in already low gasoline inventories sharpened the threat of a supply crunch that could hurt economic growth.
US light crude futures rose US$0.70 to settle at US$38.18 a barrel, nearly 2 percent higher. In London, May Brent crude ended US$0.85, or 2.6 percent, up at US$33.53.
It was the highest settlement for US crude since October 1990.
Prices jumped after the Energy Information Administration, an arm of the US Department of Energy, released its latest snapshot on the world's biggest oil market. The report showed a further 800,000 barrels decline in gasoline stocks to 199.6 million barrels.
US gasoline supplies are running 5 percent below the five-year average, sparking concerns refineries will struggle to build supplies in time for summer holiday driving demand.
"What we're seeing now is that some funds had moved to the side making sure there wasn't a bearish surprise and now they are rotating back into the long side," said Jim Ritterbusch, president of Ritterbusch and Associates.
US light crude prices have averaged almost US$35 a barrel so far this year, well above last year's average price of US$31, which was the highest in more than two decades.
At the day's settlement, crude futures had risen US$4.31, or nearly 13 percent, since Feb. 10, when OPEC decided it would cut official production quotas by 4 percent from April 1.
OPEC's cuts and rocketing Asian demand from China and India have combined to push prices to levels which consuming countries fear could hurt economic growth.
The head of Germany's export industry association said on Tuesday that oil prices pose a bigger risk to Germany's economic recovery than the euro's exchange rate.
The surge in price led the US to spend an extra US$200 million on oil in January versus December, even though it imported 8 million fewer barrels, according to the US Commerce Department.
In January, the US trade deficit widened to a record US$43.1 billion. Economists say the oil price surge was the spoiler.
OPEC ministers agreed last month to eliminate 1.5 million barrels per day of supply above existing quotas and cut official production limits in April by 1 million barrels per day to 23.5 million barrels.
While most OPEC ministers have said they intended to implement the April cuts, there have been few signs of cutbacks in March.
Tanker tracking consultant Petrologistics has told clients it expects the 10 OPEC members with quotas to produce 25.63 million barrels a day in March, down just 150,000 from 25.78 million barrels in February.
One OPEC member, Nigeria, has already apparently reversed its initial cutback plan and added up to 250,000 barrels per day of extra crude at the last minute for April exports.
RETHINK? The defense ministry and Navy Command Headquarters could take over the indigenous submarine project and change its production timeline, a source said Admiral Huang Shu-kuang’s (黃曙光) resignation as head of the Indigenous Submarine Program and as a member of the National Security Council could affect the production of submarines, a source said yesterday. Huang in a statement last night said he had decided to resign due to national security concerns while expressing the hope that it would put a stop to political wrangling that only undermines the advancement of the nation’s defense capabilities. Taiwan People’s Party Legislator Vivian Huang (黃珊珊) yesterday said that the admiral, her older brother, felt it was time for him to step down and that he had completed what he
Taiwan has experienced its most significant improvement in the QS World University Rankings by Subject, data provided on Sunday by international higher education analyst Quacquarelli Symonds (QS) showed. Compared with last year’s edition of the rankings, which measure academic excellence and influence, Taiwanese universities made great improvements in the H Index metric, which evaluates research productivity and its impact, with a notable 30 percent increase overall, QS said. Taiwanese universities also made notable progress in the Citations per Paper metric, which measures the impact of research, achieving a 13 percent increase. Taiwanese universities gained 10 percent in Academic Reputation, but declined 18 percent
CHINA REACTS: The patrol and reconnaissance plane ‘transited the Taiwan Strait in international airspace,’ the 7th Fleet said, while Taipei said it saw nothing unusual The US 7th Fleet yesterday said that a US Navy P-8A Poseidon flew through the Taiwan Strait, a day after US and Chinese defense heads held their first talks since November 2022 in an effort to reduce regional tensions. The patrol and reconnaissance plane “transited the Taiwan Strait in international airspace,” the 7th Fleet said in a news release. “By operating within the Taiwan Strait in accordance with international law, the United States upholds the navigational rights and freedoms of all nations.” In a separate statement, the Ministry of National Defense said that it monitored nearby waters and airspace as the aircraft
UNDER DISCUSSION: The combatant command would integrate fast attack boat and anti-ship missile groups to defend waters closest to the coastline, a source said The military could establish a new combatant command as early as 2026, which would be tasked with defending Taiwan’s territorial waters 24 nautical miles (44.4km) from the nation’s coastline, a source familiar with the matter said yesterday. The new command, which would fall under the Naval Command Headquarters, would be led by a vice admiral and integrate existing fast attack boat and anti-ship missile groups, along with the Naval Maritime Surveillance and Reconnaissance Command, said the source, who asked to remain anonymous. It could be launched by 2026, but details are being discussed and no final timetable has been announced, the source