Oil and Energy News
U.S. oil surges past $38 a barrel
Report shows another drop in gasoline supplies
Updated: 11:37 a.m. ET
March 17, 2004LONDON - Oil prices roared to fresh one-year highs on Wednesday with U.S. crude hitting $38 a barrel after another drop in already low gasoline supplies.
U.S. light crude futures rose 42 cents to $38.00 a barrel at 1550 GMT, the highest level since just before the U.S.-led invasion of Iraq last year. London Brent crude was up 47 cents at $33.15 a barrel.
Prices jumped after the U.S. government's Energy Information Administration's latest snapshot on the world's biggest oil market showed a further 800,000 barrels decline in gasoline stocks to 199.6 million barrels.
U.S. gasoline supplies are running five percent below the five-year average, sparking concerns refineries will struggle to build supplies in time for the summer holiday driving demand.
"What we're seeing now is that some funds had moved to the side making sure there wasn't a bearish surprise and now they are rotating back into the long side," said Jim Ritterbusch, president of Ritterbusch and Associates.
U.S. light crude prices have averaged almost $35 a barrel so far in 2004, well above 2003's average price of $31, which was the highest in more than two decades.
Plans by OPEC to cut official production quotas by four percent in April and rocketing Chinese demand have combined to push prices to levels which consuming countries fear could hurt economic growth.
OPEC ministers agreed last month to eliminate 1.5 million barrels per day of supply above existing quotas and cut official production limits in April by one million barrels per day to 23.5 million barrels per day.
While most OPEC ministers have said they intended to implement the April cuts, there have been few signs of cutbacks in March.
Tanker tracking consultant Petrologistics has told clients it expected the 10 OPEC members with quotas to produce 25.63 million barrels a day in March, down just 150,000 barrels per day from 25.78 million barrels per day in February.
That would put the OPEC-10 in March at 1.13 million barrels per day in excess of their official supply quotas of 24.5 million, compared to 1.28 million barrels per day in excess during February.
[Edited 2004-03-17 18:19:41]