LONDON, 6 May 2004 — Oil prices reached new 13-year-plus highs here yesterday as traders remained nervous about tight gasoline supplies in the United States and violence in the Middle East.
The price of benchmark Brent North Sea crude oil for June delivery rose to as high as $36.30 a barrel, levels last seen in October 1990 in the run-up to the 1991 Gulf War.
In late trading the contract stood at $36.12, up 19 cents from the previous closing price. New York’s reference light sweet crude June contract lost 10 cents to $38.88 in early deals, having finished Tuesday at the highest level since Oct. 12, 1990.
Traders fretted about the prospect of shortages of gasoline, or petrol, in the United States, despite a weekly report on commercial US oil inventories showing rises in crude oil and gasoline stocks.
“The numbers were not enough to reassure the market that there is not going to continue to be a tight gasoline market,” said Barclays Capital analyst Kevin Norrish. “Gasoline stocks are still well below where we need to be at this time of the year.”
The Department of Energy (DoE) said crude oil stocks rose 100,000 barrels to 298.9 million in the week to April 30 while the private American Petroleum Institute (API) reported an increase of 1.33 million barrels to 300.16 million.
For gasoline, the DoE said stocks rose by four million barrels to 204 million while the API reported an increase of 985,000 barrels to 195.81 million.
US gasoline prices have shot higher on worries that refiners will struggle to meet demand for fuel during the driving season that begins later this month when American motorists take to the roads to begin their summer vacations.
“We are only two or three weeks away from Memorial Day, which is the start of the driving season in the US,” said Bruce Evers, analyst at Investec Securities. “Stocks are very, very low and I think people will be concerned.”
Traders were also nervous about the situation in Iraq and Saudi Arabia, after a gun attack at an oil facility there over the weekend.
“There is so much going on at the moment: we’ve got geopolitics, we’ve got terrorists attacking oil installations, Western workers being killed, inventories are low, demand is picking up constantly ... it is a very difficult market,” said Evers.
However, while prices have soared recently, the president of OPEC said the group’s members were exceeding their agreed production ceiling by 1.5 million barrels per day (bpd).
At a meeting in March in Vienna, the Organization of Petroleum Exporting Countries agreed to cut oil output by one million bpd to reduce total production to 23.5 million from April 1.