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Oil Prices Creep Slightly Higher

Posted on: Friday, 9 November 2007, 12:00 CST

By JACKIE FARWELL

NEW YORK - Oil prices crept slightly higher Friday as markets took a breather from the feverish trading that has fueled a race to record prices.

Light, sweet crude for December delivery on the New York Mercantile Exchange rose 57 cents to $96.03 a barrel in midday trading in New York.

"We're out of adrenaline, the market's just a little fatigued," said Tim Evans, an analyst at Citigroup Inc. in New York. "We've run a long way and it's time for things to slow down a little bit."

A price movement of even $1.50 to $2 is considered narrow in today's market, he said.

On Thursday, the contract fell 91 cents to settle at $95.46 after Federal Reserve Chairman Ben Bernanke said the housing slump and high oil prices, among other factors, will slow economic growth in coming months.

In London, Brent crude rose 70 cents to $93.49 a barrel on the ICE Futures exchange.

News of two shutdowns in the North Sea exacerbated supply worries earlier in the session. But oil companies operating in the region said Friday that they had begun restarting shut-in output totaling at least 330,000 barrels of oil equivalent a day.

Energy investors worry that any slowdown in the U.S. or global economy will crimp demand for oil and gasoline. The U.S. is the world's largest user of oil, accounting for about a quarter of daily petroleum consumption.

StatoilHydro ASA said it restarted production at its Visund oil field early Friday and expects to bring its Oseberg South field back online later in the day. Both fields account for around 110,000 barrels a day of oil production. BP PLC also expects to restart oil and gas production at its 80,000 barrel-a-day Valhall field later Friday as winds in the region ease.

ConocoPhillips said it had no reports of damage to its oil installations in the Ekofisk region after the storm and it was sending evacuated crews back to the closed platforms.

In the heating oil and natural gas markets, traders were excited about forecasts for temperatures to cool to more seasonal levels over the next couple of weeks, Evans said.

Heating oil futures rose 2.36 cents to $2.6294 a gallon on the Nymex, while natural gas futures rose 15 cents to $7.863 per 1,000 cubic feet.

Gasoline prices climbed 1 cent to $2.4476 a gallon.

Word of a power outage and fire Thursday at Valero Energy Corp.'s 325,000 barrel a day refinery in Port Arthur, Texas, supported prices somewhat. While it's too early to tell how much production will be affected, the outage added to investor concerns.

Crude prices are within the range of inflation-adjusted highs set in early 1980. Depending on how the adjustment is calculated, $38 a barrel then would be worth $96 to $103 or more today.

Estimates of where crude prices will head from here vary. Many analysts expect prices to rise to at least $100 a barrel, but a growing chorus is warning that futures are due for a sharp downturn soon.

"If this market has trained me in any fashion, it's not to expect anything and to be prepared for anything," Evans said.

Few analysts believe the underlying fundamentals of supply and demand support such high prices. Many blame speculative investing fueled by the weak dollar for oil's recent run-up. Oil futures offer a hedge against a weak dollar, and oil futures bought and sold in dollars are more attractive to foreign investors when the U.S. currency is falling.

Source: Associated Press/AP Online

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