Oil prices continue upward climb - East Valley Tribune: Business

Oil prices continue upward climb

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Posted: Saturday, October 23, 2004 7:27 am | Updated: 5:30 pm, Thu Oct 6, 2011.

Oil futures prices surged to new heights above $55-abarrel on Friday as concerns about the global supply of heating oil persist ahead of winter in the Northern Hemisphere.

Crude for December delivery climbed 70 cents to settle at $55.17 per barrel on the New York Mercantile Exchange, surpassing the previous record close of $54.93. Heating oil futures rose 1.49 cents to an unprecedented $1.5944 per gallon.

The rally in heating oil has also spilled over into natural gas futures, which soared 40.8 cents Friday to settle at $8.105 per 1,000 cubic feet. Natural gas futures are now about 67 percent higher than a year ago, even though analysts agree that supplies of this mostly domestic fuel are ample.

‘‘The primary concern now is the heating oil inventory level in the U.S.,’’ said Victor Shum, an analyst at Texasbased energy consultants Purvin & Gertz.

On Wednesday, the Energy Department reported that U.S. inventories of distillate fuel, which include heating oil and diesel, shrank for the fifth consecutive week, leaving supplies nearly 10 percent below year ago levels.

Fears of a cold Northern Hemisphere winter have further stoked the price of heating oil, as dwindling stocks have also been reported in Western Europe and Japan.

Demand for jet fuel — kerosene and additives — also typically rises during the Christmas season because of extra flights, adding even more pressure.

‘‘Production of heating oil has to ramp up fast as there is a lot of catching up to do,’’ said Shum.

Yet some analysts believe heating-oil supply fears have been somewhat overblown.

Inventories are ‘‘not catastrophically low by any means,’’ said Andrew Lebow, senior vice president at Man Financial, a New York-based brokerage.

‘‘The market has been so wracked with anxiety by it. It’s really difficult to explain,’’ he added. ‘‘What could be problematic for the market is if it’s an early cold, if November ends up being cold.’’

Also Friday, December Brent crude futures on London’s International Petroleum Exchange traded at $51.22 per barrel, up 50 cents.

While crude futures prices are more than 80 percent higher than a year ago, they still need to reach $80 per barrel in order to surpass the all-time peak — in inflationadjusted terms — set in February 1981.

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