Finotec News Archive - September 06 2007
Crude Oil Rises to a Five-Week High After U.S. Inv
Crude oil rose to a five-week high after an Energy Department report showed that U.S. oil and gasoline inventories declined more than expected last week. Crude-oil stockpiles dropped for the eighth time in nine weeksRodian Rahnayev 
06 September 2007
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Crude oil rose to a five-week high after an Energy Department report showed that U.S. oil and gasoline inventories declined more than expected last week. Crude-oil stockpiles dropped for the eighth time in nine weeks, the report showed. Crude-oil stockpiles fell 3.97 million barrels to 329.7 million in the week ended Aug. 31, the report showed. Gasoline supplies fell 1.5 million barrels to 191.1 million, the lowest since September 2005, the report showed. The U.S. warned of a terrorist threat to ``Western'' targets in Nigeria, Africa's biggest producer.
``The elements that brought us here are still in play,'' said Michael Fitzpatrick, vice president for energy risk management at MF Global Ltd, the brokerage unit of Man Group Plc, in New York. ``The drop in crude-oil stocks shows that worldwide supplies are very tight. The dispute between Israel and Syria and the news from Nigeria today add to the geopolitical worries.''
``The drops in gasoline and crude were pretty well anticipated,'' said Bill O'Grady, director of fundamental futures research at A.G. Edwards & Sons in St. Louis. ``We are entering a time of year when gasoline supplies and demand naturally drop.''
New York crude oil futures closest to delivery are more expensive than the prices for contracts for later delivery, a condition known as backwardation. During the first half of the year the market was in contango, where oil for future delivery is higher than near-month prices. Contango trading encourages companies to increase stockpiles.
``The drop in crude stocks is a rational response to backwardation,'' said Tim Evans, an energy analyst at Citigroup Inc. in New York. ``Refiners don't want to pay to hold oil so they are liquidating stocks as far as they can without affecting output. Inventories could fall another 50 million barrels before that's the case.''
Syria warned Israel it will retaliate against aggression, saying Israeli warplanes crossed the Arab country's northern border and were repelled by its air defenses. Oil rose to a record last year on concern fighting in Lebanon between Israel and Islamic militia Hezbollah would spread through the Middle East, the region responsible for about a third of global output.
Mohamed bin Dhaen al-Hamli, president of the Organization of Petroleum Exporting Countries, said in an interview today that the world oil market is ``adequately supplied.'' OPEC, which pumps about 40 percent of the world's oil, will discuss output quotas at its meeting in Vienna on Sept. 11.
Finotec Analysis Team
06 September 2007
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