Lower oil supply boosts crude futures

www.upi.com By Hil Anderson UPI Chief Energy Correspondent From the National Desk Published 3/12/2003 6:41 PM

LOS ANGELES, March 12 (UPI) -- Oil prices moved ever higher on Wednesday after closely watched weekly inventory reports showed the United States' oil supply fell nearly 4 million barrels last week as crude imports declined by more than 1 million barrels per day.

The news contributed to a jump of $1.11 for April crude futures on the New York Mercantile Exchange Wednesday and an increase of more than 70 cents on London's International Petroleum Exchange.

"Crude oil imports have averaged over 8.3 million barrels per day over the last four weeks, but this is still 300,000 barrels per day less than averaged during the same four-week period last year," the Energy Information Administration said. "Although the origins of weekly crude oil imports are very preliminary ... imports from Venezuela over the last two weeks appear to be much closer to pre-strike levels than earlier in the year."

The agency reported last week's total imports averaged 7.6 million barrels per day. Modern supertankers generally have a cargo capacity of nearly 2 million barrels.

The news, coming at a time that the United States is poised to launch a war in the Persian Gulf, contributed to Wednesday's upward momentum on NYMEX that carried April crude to $37.83 per barrel, a level not seen since Iraq's brief occupation of Kuwait in 1990. Prices were expected to test $38 per barrel during after-hours trading.

April heating oil gained a half-cent to $1.0352 per gallon while April gasoline settled at $1.145 per gallon, up 1.58 cents.

Oil has been extremely volatile to the upside ever since the United States and Iraq began moving toward a military confrontation. Gasoline prices in the United States have reached virtual record levels of $1.706 per gallon, according to AAA, with California averaging a whopping $2.119.

The EIA said that U.S. gasoline stocks fell 4.1 million barrels last week and remained "below the low end of the normal range," while crude supplies in the Midwest continued to bump along at slightly above the lowest level recorded since the EIA began keeping supply records in 1989.

This year's low supply and high prices have been used to bolster the Bush administration's goal of increasing domestic petroleum production, particularly in the pristine Alaskan wilderness where environmentalists fear wildlife could suffer a devastating blow to their habitat.

The Department of the Interior announced Tuesday that the North Slope's caribou population had boomed since oil production in the region began in the 1970s. The announcement was followed Wednesday by an Interior press release calling the protected Arctic National Wildlife Reserve the most-promising area in the nation for potential oil production.

"The Coastal Plain of ANWR's 1002 area is the nation's single greatest onshore oil reserve," Interior Secretary Gale Norton said in the statement. "The U.S. Geological Survey estimates that it contains a mean expected value of 10.4 billion barrels of technically recoverable oil. To put that into context, the potential daily production from ANWR's 1002 area is larger than the current daily onshore oil production of any of the lower 48 states."