Sam Fletcher
Senior Writer
HOUSTON, May 13 -- Crude and gasoline futures prices hit record highs Wednesday on the New York Mercantile Exchange and are likely to continue climbing as members of the Organization of Petroleum Exporting Countries mull raising their production quotas at their scheduled June 3 meeting in Beirut.
The June contract for benchmark US light, sweet crudes jumped by 71¢ to a record high closing price of $40.77/bbl Wednesday on NYMEX, surpassing the previous record of $40.42/bbl set Oct. 11, 1990, shortly before the United Nations issued an ultimatum for Iraq to pull its invading troops out of Kuwait. The July contract advanced by 69¢ to $40.66/bbl. On the US spot market, West Texas Intermediate at Cushing, Okla., gained 70¢ to $40.78/bbl.
"The longer prices stay above $40[/bbl], the harder it will become to pull them back down," said Paul Horsnell, Barclays Capital Inc., London. Once traders realize "that there is nothing magical about $40[/bbl crude] that derails economic growth or results in any extra supply or inventory, then they will start getting comfortable with prices at this level," he said. "If prices are still above $40[/bbl] in a month, we would not be surprised to see them stay above that level for the rest of the year."
Prior to the Wednesday's closing, the near-month contract sold as high as $40.92/bbl as traders shrugged off an earlier call by Ali I. Naimi, Saudi Arabia's energy minister, for a 1.5 million b/d hike in OPEC's production quota. Nonetheless, Purnomo Yusgiantoro, Indonesia's energy minister and conference president for OPEC, said Wednesday that ministers may hold informal talks at a meeting with other oil producers and consumers May 22-24 in Amsterdam.
Energy prices
Gasoline for June delivery soared by 5.12¢ to a record high NYMEX closing of $1.3735/gal, after hitting as high as $1.375/gal, another record, during trading Wednesday. The near-month gasoline contract had registered consecutively record-high closing prices in 10 of the previous 14 NYMEX sessions, starting Apr. 22, as traders worried that US gasoline stocks remained at critically low levels prior to the traditional start of summer demand on Memorial Day, May 31.
Heating oil for the same month shot up by 2.34¢ to $1.0392/gal Wednesday on NYMEX. The June natural gas inched up by 1.9¢ to a new high of $6.41/Mcf, after a 20.2¢ jump on Tuesday marked the highest price for a front-month contract since late January, analysts said.
The latest jump in NYMEX gasoline futures prices followed an announcement Wednesday by the US Energy Information Administration that US gasoline stocks fell by 1.5 million bbl to 202.5 million bbl during the week ended May 7, despite a 1.1 million bbl increase in commercial US crude inventories to 300 million bbl during the same period. Distillate stocks edged up by 300,000 bbl to 107.5 million bbl.
In London, the June contract for North Sea Brent crude increased by 59¢ to $37.95/bbl Wednesday on the International Petroleum Exchange. Gas oil for May delivery was unchanged at $327.50/tonne. The June natural gas contract escalated by 5.1¢ to the equivalent of $3.93/Mcf on IPE.
The average price for OPEC's basket of seven benchmark crudes rose by 17¢ to $36.74/bbl Wednesday.
Contact Sam Fletcher at [email protected]
