Oil prices held firm around $51 a barrel on Wednesday, hovering near record highs amid the sluggish recovery in US Gulf oil production and an anticipated decline in key winter fuel stocks, dealers said.
US light, sweet crude oil futures were unchanged at $51.09 a barrel, having reached a new peak of $51.29 on Tuesday, the highest level recorded in the contract's 21-year history. Prices first crossed the $50 mark 10 days ago.
European benchmark Brent was down three cents at $47.10 a barrel, having hit a record $47.41 a day ago. Oil has surged more than 50 percent this year, driven by the strongest demand growth in a generation and a thin cushion of spare output capacity to deal with any unexpected supply outages.
Violence and sabotage in Iraq has been a constant source of worry for the world's stretched supply chain, with last week's threat to fellow Opec member Nigeria's supplies adding to the anxiety, traders say.
The focus of concern now is the United States where the lingering impact of Hurricane Ivan has left about 453,000 barrels per day (bpd) of production over a quarter of total Gulf of Mexico output shut in since mid-September.
With major oil exporters pumping at near capacity, there is little leeway for any significant or lasting supply disruptions, and the slow pace of output recovery in the Gulf has stoked fears of a potential wintertime supply crunch.
"(Yesterday's move) was about the effects of Hurricane Ivan. It's an indication of how much the market is sitting on a knife edge," Daniel Hyenas, industry analyst at ANZ Bank in Melbourne.
The impact on US domestic production has now surpassed the cumulative effects of storms in 2002, the last time the weather seriously affected oil and gas operations in the Gulf, the US Minerals Management Service said on Tuesday.
The outage comes just as the world's leading energy consumer should be building up supplies for the northern winter, when consumption of heating oil peaks in the north-east of the country.
Inventories of winter fuels are already running some 3.5 percent below last year and are expected to have fallen again last week, according to a Reuters poll of 10 analysts.
A particularly cold winter would further stress those supplies. In government data to be released, the analysts expected distillate stocks, which include heating oil, to have fallen by 900,000 barrels in the previous week.
Gasoline stocks were forecast to have fallen by 600,000 barrels. Crude supplies were seen building by 2.2 million barrels in the week to October 1 after good weather allowed Ivan had delayed offloading of more imports that.
Other major oil consumers are also holding relatively thin heating oil supplies, with number three energy user Japan still running a significant deficit against last year, according to data from the country's industry group on Wednesday.
Comments
Comments are closed.