Crude futures cross the $86 mark as fresh tension surfaces in Middle East
Crude oil futures rose today and crossed the $86/barrel mark for the first time ever as fresh problems surfaced between Turkey and Iraq. The problems gave birth to concerns that this might lead to slowing down of shipments as peak season is commencing and would call for more demand for meeting the peak heating demand.
For the day ending Monday, 15 October, 2007, crude-oil futures for light sweet crude for November delivery closed at $86.13/barrel (higher by $2.44/barrel or 2.9%) on the New York Mercantile Exchange. Futures reached $86.22 during intra day trading.
Prices climbed on reports that Turkey's military may attack Kurdish bases in Iraq, which has the world's third-largest oil reserves.
Brent crude oil for November settlement rose $2.24 (2.8%) to $82.79 a barrel on the London-based ICE Futures Europe exchange.
Prices were also boosted by some comments from OPEC after the Organization of Petroleum Exporting Countries said production outside the group will be lower than previously forecast. OPEC said that non-OPEC supply will average 50.29 million barrels a day this year, down 28,000 barrels from last month's estimate.
OPEC has said previously that a falling dollar justified higher prices because oil- producing countries sell crude oil in dollars and often buy goods in euros.
Heating oil and natural gas futures advance
Natural gas in New York advanced after crude oil rose to a record on concern supplies may be threatened by military action on the border of Turkey and Iraq. Gas for November delivery rose 47.1 cents (6.8%), to $7.445 per million British thermal units
Against this backdrop, heating oil for November delivery increased 6.17 cents (2.8%) to $2.3081 a gallon in New York.
At the MCX, crude oil for October delivery closed at Rs 3367/barrel, higher by Rs 74 (2.2%) against previous day’s close. Natural gas closed at Rs 290.8/mmtbu as against previous close of Rs 274.6/mmtbu (higher by 5.8%).
OPEC planned to boost daily oil production by 500,000 barrels. OPEC's production target is 27.2 million barrels a day, beginning 1 Nov. OPEC, has decided to raise their daily output by 500,000 barrels per day, starting 1 November.
Attacks on oil facilities in Nigeria have curtailed shipments and tight supplies from OPEC have bolstered crude prices this year. As per the U.S. Energy Information Administration, tight global energy supplies are expected to keep energy prices high through 2008.