Oil prices soar above $133 per barrel on U.S. supply drop, peak oil scenario approaching faster than expected

Oil prices soar above 133 dollars on U.S. supply drop
www.chinaview.cn 2008-05-21 23:32:11

·Oil prices shattered record highs and soared above $133 a barrel on Wednesday.
·Crude inventories fell 5.32 million barrels to 320.4 million barrels last week.
·Hedge-fund manager Boone Pickens said Tuesday that oil will reach 150 dollars a barrel.

NEW YORK, May 21 (Xinhua) --

Oil prices shattered record highs and soared above 133 U.S. dollars a barrel Wednesday after a report showed an unexpected drop in the US crude stockpiles.

Light, sweet crude for July delivery rose 4.19 dollars to settled at 133.17 dollars a barrel on the New York Mercantile Exchange (NYMEX), trading up 4.19 dollars, the largest one-day price advance since March 26. But prices continued to rise as high as 133.82 dollars a barrel in the after-hour electronic trading.

In London, Brent crude for July delivery rose 4.86 dollars to close at 132.70 a barrel.
Unexpected inventory drop

The U.S. Energy Department's Energy Information Administration (EIA) released its weekly report Wednesday, saying that crude inventories fell 5.32 million barrels to 320.4 million barrels last week, the biggest drop in four months. Analysts had expected crude oil stocks to be up 900,000 barrels, according to a survey from Platts, an energy research firm.
Prior to the report which was out at 10:30 a.m. local time (1430 GMT), crude futures on NYMEX was down 29 cents to 128.69 dollars a barrel.

"The price of oil is being driven by rising demand and worries that current supplies are not going to be sufficient to meet this demand," Wall Street Strategies' senior research analyst Conley Turner told Xinhua. "In reality, however, it is almost a frenzy that is being validated by the various oil related data points being released."

Today it is the EIA report, tomorrow it may be some geopolitical event, Turner added.
Bullish oil remains. "It is very possible that we can see 150 dollars before the end of this year," Turner predicted, "If this pace continues, we can reach that milestone by summer's end."

The June contract expired Tuesday with crude settling at the then record high of 129.07 dollars a barrel, up 2.02 dollars from Monday's settling price of 127.05 dollars a barrel. Crude oil prices have more than doubled in the past year.

"We remain bullish on oil and oil stocks for the long term, but at this point, it is very clear that there is a significant among of speculative money driving this trade," said Turner. "The path of least resistance for prices is higher and it will keep going up until it does not!"

U.S. billionaire hedge-fund manager Boone Pickens told CNBC on Tuesday that oil will reach 150 dollars a barrel this year because the global supply can not meet the demand. Goldman Sachs raised its average oil price forecast for the second half of this year to141 dollars from 107 dollars a barrel on Friday.

Goldman, the most active investment bank in the energy market, also predicted earlier that supply shortage will send oil prices to 200 dollars a barrel within two years.

"Standing in front of this train is perhaps not the best trading strategy as capital can be lost very quickly for those market participants looking to time a reversal of this trend," said Turner, adding that this is a poignant example of the famous quote that "the market can remain irrational longer than you can remain solvent."

U.S. crude oil inventories drop after four straight gains

www.chinaview.cn 2008-05-22 09:35:53

WASHINGTON, May 21 (Xinhua) --

U.S. commercial crude oil inventories plunged last week after four consecutive weeks of increases while gasoline stockpiles also fell unexpected, the Energy Department reported Wednesday.

In the week that ended May 16, the nation's commercial crude oil inventories plummeted 5.4 million barrels to 320.4 million, which were 6.5 percent below year-ago levels. Analysts had been expecting a gain of 900,000 barrels for last week.

Gasoline stockpiles, meanwhile, declined 800,000 barrels last week to 209.4 million, which were 4.9 percent above year-ago levels. The drop defied analysts who were forecasting a 500,000 barrel rise.

However, supplies of distillates, which include heating oil and diesel fuel, rose by 700,000 barrels to 107.8 million last week. The increase was smaller than the gain of 1.5 million barrels expected by analysts.

The report also showed that U.S. crude imports declined to 9.237 million barrels per day last week from the previous week's 9.933 million barrels, while gasoline imports climbed to 1.143 million barrels per day from 915,000 barrels the week before.

Gasoline demand stood at 9.359 million barrels a day last week, compared with 9.343 million barrels a day in the previous week.

At the same time, U.S. refineries ran at 87.9 percent of total capacity on average last week, a gain of 1.3 percentage points. Analysts expected capacity to rise by only 0.6 percentage point.

The figures for commercial crude oil inventories do not include the U.S. Strategic Petroleum Reserve, which currently holds crude oil of about 703 million barrels.

Editor: Amber Yao

Dollar falls on oil prices and U.S. growth outlook

www.chinaview.cn 2008-05-22 06:41:55

NEW YORK, May 21 (Xinhua) --

The dollar extended losses against most major currencies on Wednesday after oil soared to a new record and the U.S. Federal Reserve sharply lowered its projection for U.S. economic growth this year.

Light, sweet crude for July delivery settled at 133.17 dollars a barrel on the New York Mercantile Exchange after a government report showed that U.S. crude inventories fell unexpectedly last week.

Under its new economic forecast, the Federal Reserve said it now believes gross domestic product will grow between just 0.3 percent to 1.2 percent this year.

That's lower than a previous Fed forecast, released in late February, that estimated growth to be between 1.3 percent and 2 percent.

The euro bought 1.5780 dollars in late New York trading compared with 1.5669 dollars it bought late Tuesday. The British pound rose 1.9689 dollars from 1.9677 dollars.

The dollar fell to 1.0272 Swiss francs from 1.0368 Swiss francs, and unchanged at 104.17 Japanese yen. It fell to 0.9848 Canadian dollars from 0.9923 Canadian dollars.

Editor: Yan Liang

'Peak oil scenario' approaching faster than expected

www.chinaview.cn 2008-05-21 22:16:28

ABERDEEN, Scotland, May 21 (Xinhua) --

After successfully forecasting current oil prices at the first All Energy conference in 2001, John Westwood, an energy expert, said here on Wednesday that "more pain is to come" for world energy.

Speaking at the opening session of the All Energy'08, the 8th in the annual series, John Westwood, Chairman of energy analysts Douglas-Westwood, a research consultant company for international energy industries, said "there is a strengthening view that the 'peak oil scenario' is approaching much faster than any of us expected."

He said people such as Christoph De Margerie, CEO of Total, and T. Boone Pickens believe the world will never exceed its current level of production as new oil fields fail to compensate for declining ones.

The energy expert said recently published statistics suggest production from ten out of the top 13 international oil companies, including BP, Chevron, Total and Shell may have already passed it speak.

He said that in 1970 such oil companies controlled about 80 percent of world reserves whereas today that 80 percent is in the hands of national oil companies.

"However, the Saudis have put their oil campaign on hold stating that it will not increase production to 15 million barrels per day; and despite oil prices hitting new records Russian output has slumped", he said, adding that this may be another hint of the oil peak.

Turning to natural gas, Westwood stated that local depletion in countries such as the UK is bringing major security of supply concerns, as "nowadays over 40 percent of Europe's gas is supplied by Russia."

He said that coal has great potential for fueling increased power generation but Australian coal prices recently went from 98 U.S. dollars to 300 U.S. dollars per ton in one step.

Westwood said the world has a major need to develop clean coal technology for application, but the practicalities and economics are very difficult.

"Nuclear power offers a practical way ahead with massive investment likely, but as with other sectors costs are soaring," he said.

It is reported that prices for new generation nuclear plants are now 5-12 billion US dollars, two to three times earlier estimates, the energy expert said.

"Undoubtedly, huge opportunities lie ahead for renewable energy," Westwood said, adding that a recent U.N. report estimated that in 2007 global investment in renewable energy reached 100 billion dollars and Morgan Stanley has forecast that clean energy will be a one-trillion- dollar market by 2030.

Douglas-Westwood forecast that annual investments in offshore wind power projects will rise from less than one billion dollars in 2007 to nearly seven billion dollars in 2012.

While describing the increased use of food crops such as corn to produce first generation biofuels and consequently driving up food prices as 'totally insane,' he said that the renewables industry faces a major supply chain problem.

"We see major long-term opportunities in renewable energies, but governments must address the planning issues and national strategies must have priority over local objections," he said.

Editor: An Lu

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