Oil Closes at Record in New York as Fuel Inventories May Drop

By Mark Shenk


Nov. 23 (Bloomberg) -- Crude oil futures rose in New York, reaching a record closing price above $98 a barrel, on concern fuel stockpiles will drop as the heating season gets under way.

Futures have surged 21 percent in the past two months as the dollar fell and U.S. inventories declined. Supplies of crude oil and distillate fuel, a category that includes heating oil and diesel, fell last week, according to an Energy Department report on Nov. 21. Transactions were lighter than usual today as some traders took a long Thanksgiving holiday weekend.

``Most of the issues that brought us here are still around so I think at some point, maybe next week, we will hit $100,'' said Tom Bentz, a broker at BNP Paribas in New York.

Crude oil for January delivery rose 89 cents, or 0.9 percent, to settle at $98.18 a barrel at 1:53 p.m. on the New York Mercantile Exchange. It was a record closing price. Futures climbed to $99.29 on Nov. 21, the highest intraday price since trading began in 1983. Prices are up 66 percent from a year ago.

Floor trading ended an hour early today because of the Thanksgiving holiday. Volume as of 1:30 p.m. was about 100,000 contracts, compared with 468,546 for the session on Nov. 21.

Brent crude oil for January settlement rose $1.26, or 1.3 percent, to $95.76 a barrel on the London-based ICE Futures Europe exchange. Brent reached $96.53 a barrel on Nov. 21, the highest since trading began in 1988.

``I don't think you can read much into the moves today because volume is light,'' said Eric Wittenauer, an analyst at A.G. Edwards & Sons Inc. in St. Louis.

Inventory Gain

Prices fell 0.8 percent on Nov. 21, after the Energy Department reported that crude-oil inventories at Cushing, Oklahoma, the delivery point for New York futures, rose 1.14 million barrels to 14.6 million last week.

The Organization of Petroleum Exporting Countries will load 24.5 million barrels a day onto tankers in the four weeks to Dec. 8, compared with 23.8 million barrels in the month ended Nov. 10, Oil Movements said. It will be OPEC's 14th consecutive increase and the biggest this year, according to the company, which tracks shipments.

OPEC, which produces more than 40 percent of the world's oil, is scheduled to discuss crude-oil production for the first quarter of 2008 at a meeting in Abu Dhabi on Dec. 5.

``It looks like we will need some strong political news or a significant inventory drop to send us above $100'' a barrel, said Michael Lynch, president of Strategic Energy & Economic Research in Winchester, Massachusetts. ``We've tested $100 twice and haven't achieved it, which raises questions about whether we can actually do it.''