Oil Futures Hit 12-Year High on News of Inventory Decline
www.nytimes.com By BLOOMBERG NEWS
Crude oil futures closed at a 12-year high yesterday, for the third time in the last two weeks, after the Energy Department reported an unexpected decline in inventories.
Supplies of crude oil last week fell 1.4 percent, to 269.8 million barrels, the department said. Inventories were 16 percent lower than they were a year earlier and close to a 28-year low. Analysts had expected an increase. The decline came as the United States appears headed for a war in Iraq, which pumps about 3 percent of the world's oil.
"This is a big problem," said John Kilduff, senior vice president for energy-risk management at Fimat USA in New York. "You don't want to have low oil inventories when the country is about to go to war."
Crude oil for April delivery rose $1.11, or 3 percent, to $37.83 a barrel on the New York Mercantile Exchange, registering the highest closing price since Oct. 16, 1990, when the Iraqi occupation of Kuwait cut off exports from both countries.
Prices reached $39.99 a barrel during trading on Feb. 27, the highest intraday price since October 1990, when futures rose to a record $41.15.
In London, the April Brent crude-oil futures contract rose 62 cents, or 1.9 percent, to $33.91 a barrel on the International Petroleum Exchange.
Crude oil imports fell 12 percent, to 7.62 million barrels a day in the week ended March 7, the weekly report on petroleum inventories, production and imports said.
"This is as bad as it gets," said Ed Silliere, vice president for risk management at Energy Merchant in New York, which markets gasoline and heating oil to local distributors. "Supplies are very tight."
Analysts had expected that increasing imports from Venezuela and Saudi Arabia would send inventories higher. A strike in Venezuela had been limiting shipments to the United States.
Venezuela pumped about 3 million barrels of oil a day before the strike began in December and now is pumping 2.7 million barrels a day, according to the Venezuelan government. Striking oil workers say production is closer to 1.9 million barrels a day.