Record High Oil Prices Top $98 a Barrel Wednesday November 07, 2007 10:03am from our sister station WJLA-TV ___  Interact  ___    • Printable Version    • E-Mail This Story ___  Related Stories  ___ New Record Low for Dollar Redskins' Suisham Honored Oil Rises to Record Above $98 a Barrel VIENNA, Austria (AP) - Record oil prices edged closer to $100 a barrel Wednesday amid expectations of declining U.S. supplies. The weak dollar and OPEC's apparent reluctance to pump more crude into the market also boosted prices.Light, sweet crude for December delivery surged $1.24 to $97.94 a barrel by midday in Europe after earlier reaching a record $98.62 in electronic trading on the New York Mercantile Exchange. The contract hit a high of $97.10 Tuesday before closing at $96.70 a barrel, a record settlement 66 percent higher than the close on the first trading day of the year. In London, Brent crude rose $1.29 to $94.55 a barrel on the ICE Futures exchange. A number of North Sea oil platforms were evacuated Tuesday ahead of expected severe weather, and BP PLC said it expects to shut production Thursday from its Valhall oil and gas field. Traders remain worried about whether supplies will be adequate to meet demand for heating fuel in the approaching Northern Hemisphere winter. News of an attack Monday on an oil pipeline in Yemen added to those concerns. "The oil market sentiment remains bullish ... there is an overall upward trend toward the $100 level," said Victor Shum, energy analyst with Purvin & Gertz in Singapore. "Meanwhile, we can expect extreme volatility where on the one hand some traders will take profit while others will buy back positions." Global Insight energy analyst Simon Wardell was even more unequivocal. "The run on $100 ... (a barrel) now seems inevitable," he said in a research note. "In the short term all eyes will be fixed on the U.S. government's Energy Information Administration ... inventory data." Those figures to be released later Wednesday are expected to show crude supplies dropped last week. Analysts surveyed by Dow Jones Newswires predict, on average, that crude oil inventories fell by 1.6 million barrels. "The price rise is really driven by expectations of drawdowns in crude oil and distillate stocks inventories in the U.S. inventory report," said Shum. "Some cold weather reports out of the U.S. and Europe serve as a reminder that winter is coming and that there are still supply concerns." On Tuesday, the U.S. Department of Energy's Energy Information Administration said oil stocks in the countries of the Organization for Economic Cooperation and Development are forecast to fall this winter, ending the year at the lowest level since January 2005. In London, International Energy Agency head Nobuo Tanaka said he shared those concerns. "Stocks provide an important cushion between supply and demand," he told reporters. "They add supply side flexibility, reduce volatility and minimize the incentive for speculation. "At current prices the market is signaling that stocks need to be higher — something that is in the power of producers to address. "In the longer term, there is little doubt that both producers and consumers share the responsibility to ensure more investment in supply and greater effort to improve energy efficiency." According to the Paris-based IEA, consumers and governments globally are currently doing too little to improve energy supply security and cut pollution. In its annual outlook for energy through 2030, the agency said the next 10 years are critical for governments globally to address these challenges as energy demand surges in the booming economies of China and India. Continuing strong global oil demand and lower-than-expected output from countries outside the Organization of Petroleum Exporting Countries will put more reliance on supplies from OPEC and global inventories, the U.S. EIA said in its short-term outlook. Any reduction in oil inventories is likely due to a suspension of output at Mexico's state oil company Petroleos Mexicanos, a major crude exporter to the United States, which temporarily shut its ports last week due to severe weather. The weak U.S. dollar, which fell to another new low against the euro Wednesday, is also lifting oil prices. Oil futures offer a hedge against a weak dollar, and oil futures bought and sold in dollars are more attractive to foreign investors when the dollar is falling. OPEC — supplier of about 40 percent of the globe's crude — appeared unimpressed. In Vienna, PVM Oil Associates noted that — despite record prices — OPEC "has not shown any intention of increasing supplies on top of the 5,000,000 b/d (barrel a day) hike, which became effective at the beginning of this month." Analysts also expect the EIA to report Wednesday that gasoline inventories rose by 200,000 barrels during the week ended Nov. 2, while supplies of distillates, which include heating oil and diesel fuel, fell by 500,000 barrels. Heating oil futures added 2.56 cents to $2.6334 a gallon (3.8 liters) while gasoline prices rose 2.02 cents to $2.4552 a gallon. Natural gas futures rose 4.7 cents to $7.910 per 1,000 cubic feet. The analysts expect that refinery use grew by 0.8 percentage point to 87 percent of capacity. ——— Associated Press writers Gillian Wong in Singapore and Jane Wardell in London contributed to this report. » Click Here To Return to Previous Page » Find More Articles Related To This One Copyright 2007 by The Associated Press. All rights reserved. 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