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Oil prices steadied on November 3, 2004 as
President George W. Bush edged toward re-election, a result which
traders said could bolster fuel demand and underpin anxiety over
security of Middle East supply. A Citgo oil refinery in Lemont, Illinois is shown Oct. 11, 2004.
(Reuters) |
Oil prices surged more than $1 on Wednesday as the re-election of
President Bush countered the impact of a big increase in spare oil
supplies ahead of winter.
Crude dealers said Bush's victory over Democrat
Senator John Kerry could bolster U.S. fuel demand and underscore
anxiety over the security of
Middle East oil shipments.
U.S. light crude settled up $1.26 to $50.88 a barrel, climbing back
over the psychological $50 mark after settling below it for the first time
in a month on Election Day. Brent crude was up $1.01 to $47.56.
A second Bush administration will likely continue filling U.S.
emergency oil stockpiles despite high prices and could stoke nerves about
U.S. policy in the Middle East, particularly OPEC's second-biggest
producer Iran.
"A Bush victory will be big for oil demand and keep prices high," said
Phil Flynn, an analyst at Alaron Trading in Chicago. "Not only will the
SPR be filled, but I think they may expand it."
The Bush White House has said it plans to fill the final 30 million
barrels of the 700 million barrel Strategic Petroleum Reserve (SPR) by
next year, which adds to already strong demand from end-users.
Prices had tumbled from last week's record high at $55.67, pressured by
speculation that a win for Kerry would halt deliveries into the SPR, and
do more to encourage energy conservation.
Dealers had also speculated that Kerry's policy in the energy-rich
Middle East would be less aggressive than Bush's and more prone to move
through diplomatic channels.
"If another Bush government moves on to Iran, then oil prices would go
very high and really threaten China's economic development," said Andy
Xie, Morgan Stanley's chief Asia economist.
China's economic expansion has driven the fastest growth in world oil
consumption for a generation this year.
Some nations will face economic recession if oil prices stay above $40
a barrel, the International Energy Agency (IEA)'s chief economist Fatih
Birol said on Wednesday.
"At this price level, not just above $50 but also above $40, Europe and
developing countries are in risk of recession," Fatih Birol said.
Oil company share prices on the New York Stock Exchange were also
stronger Wednesday, with ChevronTexaco up $1.17 to $53.27, ConocoPhillips
up $1.97 to $85.40, ExxonMobil up 84 cents to $49.27.
The high prices come despite signs of increasing supply, boosted by the
highest output from the OPEC cartel in 25 years and by increased exports
from Iraq over the last two months.
The U.S. government's Energy Information Administration reported
Wednesday that crude stocks rose last week by 6.3 million barrels, briefly
pressuring prices below $49 a barrel by easing supply worries ahead of
winter.
Crude stocks have risen more than 10 million barrels in the last two
weeks as they recover from the impact of Hurricane Ivan which tore into
the oil-producing U.S. Gulf of Mexico in September.
"Imports are back at comfortable levels so any concerns about crude
availability have been dissipated considerably," said Jim Ritterbusch,
President of Ritterbusch and Associates.
The U.S. crude build was accompanied by a 900,000 barrels fall in
distillate stocks, including heating oil and diesel fuel, to 115.7
million, 12 percent below last year, the EIA said.
U.S. distillate demand is running 8.1 percent above last year as solid
economic growth bolsters diesel consumption. Traders expected supplies to
improve as refineries come back on stream following seasonal maintenance
work.
"The market believes when refiners return from turnarounds, that they
are going to push distillate output to a record, thus easing concerns of a
supply shortage this winter," said Ed Silliere, analyst, Energy Merchant
Corp, New York.
(Agencies) | 
Updated: 2004-11-04 10:33