Crude oil prices hovers in the $58 range in midday trading. The price opened at $58.35 this morning and shot up as high as $58.90 before dropping back to $58. Traders are anxious to see how Hurricane Emily will alter oil tanker traffic from Venezuela and Mexico.
Heating oil also went down a penny to $1.66 per gallon from its opening price of $1.67. Gasoline was down two cents from it’s opening of $1.71. to $1.69 per gallon.
A recent survey by Bloomberg came out with some interesting information. 36% of the 59 analysts surveyed think the price of crude may drop significantly as refiners continue push up levels of distillate fuels in their efforts to build up supplies for the fourth quarter.
This particular premonition should make some consumers feel a bit better after dealing with record high prices on fuel across the board. According the survey, many feel the market is adequately supplied right now and that prices should fall.
“Crude markets are well supplied as are refined product markets,” Szabo, chief executive of consultant Stone Bond Technologies, said in Houston. “Barring some new tropical storm or unforeseen accidental supply disruption, prices should fall.”
Wednesday’s EIA report showed promising numbers for distillates and even though crude oil inventories dropped, they’re still significantly higher than the average of this time a year. Crude oil inventories dropped 3.9 million barrels to 320.9 but still up 7.7% for the year.
Distillate continue to be the surprise for many analysts because inventories have grown quite a bit for the last three weeks. Gasoline levels dropped a fairly substantial 2.7 million barrels to 212.6 million but are still up 6.7 million barrels for the year.
They were all surprised for the third week in a row when distillates increased 3.2 million and is up 3.7 million for the year at 120.4 million barrels. Refineries have been steadily increasing the levels of distillates although overall production was down a couple of percentage points due to Cindy and Dennis, the storm twins.
Unfortunately, the forecast for petroleum future is more of the same. Many events can alter the prices of crude dramatically as a simple weather report showed today. With more political instability and economic growth uncertain, oil prices will remain volatile. As the U.S. moves headlong into what might be a long and difficult hurricane season prices could quite possible rise to $70 a barrel as few other places offer any increases in production. One can’t help but wonder though what adding the million barrels a day from the Caspian pipeline as well as stabilizing and putting into production the Thunder Horse fields in the Gulf will do to the price and for that matter, a more secure Iraqi oil infrastructure.
John Stith is a staff writer for murdok covering technology and business.
