Mideast crisis drives up oil prices

Daily Planet Wire Services
Thursday May 09, 2002

NEW YORK — Crude oil and products futures rallied sharply on the New York Mercantile Exchange Wednesday as U.S. crude inventories declined and Middle East tensions flared anew after two Palestinian suicide bombings in Israel. 

The nearby June crude contract soared $1.22 to $27.85 a barrel. Gasoline for June delivery rose 0.49 cent to 78.77 cents a gallon, while heating oil gained 1.54 cent to 67.40 cents a gallon. 

The American Petroleum Institute reported late Tuesday that crude inventories fell by a surprisingly large amount in the week ended May 3. The U.S. Department of Energy reported an even larger draw early Wednesday. 

Crude stocks declined by 4.5 million barrels to 321 million — slightly above last year’s level — as imports fell by 686,000 barrels a day and refinery utilization rose 0.3 percentage point to 93.2 percent of operable capacity, the American Petroleum Institute reported late Tuesday. Early Wednesday, the Department of Energy reported that crude stocks fell by 5.5 million barrels, while refinery utilization jumped by 1.8 percentage points to 96.3 percent of capacity. Total stocks reverted to a deficit, the DOE said, and are now 5.5 million barrels below the 325.5 million reported last year. 

The market shrugged off bearish gasoline data. Gasoline stocks rose 3.9 million barrels to 214.4 million, the API reported, more than most analysts expected. Gasoline stocks increased as demand fell to 8.3 million barrels a day from 9.3 million barrels a day a week earlier, the API said. The DOE reported a more moderate increase in gasoline stocks of 2.2 million barrels. 

Fears that the fragile Israeli peace process may unravel in the wake of the latest deadly suicide bombing also permeated the market, increasing the war premium. 

“You hit good inventory numbers and you’ve got more tensions in the Middle East,” said analyst Bill O’Grady, of AG Edwards. 

Natural gas futures for June delivery rose 7.3 cents to $3.746 per 1,000 cubic feet on Nymex. In London, Brent crude from the North Sea was trading 62 cents higher at $26.03 per barrel.