Oil Tops $18 a Barrel, First Time in 4 Months
Oil prices surged for the second straight day Tuesday and broke the $18-a-barrel barrier for the first time in four months, pushed by rumors of a Panama pipeline shut-off and OPEC’s moves to reduce supplies.
On the New York Mercantile Exchange, contracts for May delivery of West Texas Intermediate crude, which jumped $1.01 a barrel Monday, advanced another 20 cents to close at $18.09.
It was the first time oil for the near-month contract closed higher than $18 since a Dec. 11 close of $18.31.
Prices also advanced for the second consecutive day among refined products traded on the exchange. Wholesale heating oil rose 1.03 cents a gallon to close at 48.91 cents, and wholesale unleaded gasoline rose 1.12 cents a gallon to close at 52.07 cents.
“The market continued yesterday’s bullish trend,” said Richard Redoglia, a trading analyst at Merrill Lynch Energy Futures in New York. “It’s just a perception change about what OPEC is saying and doing. The perception has waned back and forth because usually any statement they make is discounted. But the market heard something we haven’t heard before.”
The Organization of Petroleum Exporting Countries said it has invited non-OPEC exporters to a meeting April 23 to discuss coordinated strategies for reducing output and forcing prices up. News of the meeting Monday was a key reason for the market’s rally.
The carry-over Tuesday was further advanced by a report that Norway, an important non-OPEC producer that wasn’t among the exporters invited to the meeting, would send an observer. The report by Norway’s national news agency added to the possible significance of the meeting, traders said.
Prices also advanced on rumors, apparently unfounded, that a crucial trans-Panama oil pipeline would shut down. The rumors stemmed from an incident at a U.S. military base in the troubled Central American nation in which a Marine guard patrolling a petroleum storage area was shot dead.
“The market is sensitive to anything to do with anything and nothing to do with supply and demand. That’s exactly what’s going on,” said Peter Beutel, assistant director of Elders Energy Futures Inc. in New York.
Some market experts have detected what they call a profound shift in the oil market because of OPEC’s effort to stem an erosion of prices. Others say the fractious 13-nation cartel historically has failed to maintain pricing discipline and the latest effort likely will collapse.
