Crude Oil Prices Close at a Record $33.63 Per Barrel
Driven by rising prices in Europe and continued Mideast tension, the price of U.S. crude oil closed at a record-high $33.63 a barrel Monday in a bullish market that seemed destined to climb even higher this week.
The price of a barrel of West Texas Intermediate for delivery in October rose by $1.87 on the New York Mercantile Exchange. The U.S. benchmark crude heavily influences the price consumers pay for gasoline and other fuels.
The previous closing high, $32.35, was reached on Aug. 2, 1983, and matched Aug. 23 of this year. So far, the price of West Texas Intermediate has soared more than 50% since the Iraqi invasion of Kuwait on Aug. 2. The day before the invasion, the price of oil was $21.54 a barrel.
“Crude oil has never traded this high on the Merc,” said Randall Rothenberg, a broker with Dean Witter International Energy Futures Group in New York. “These guys are buying on the fact that (the market is) going up and it’s making new highs. You’ve got to participate.”
At one point in the day, prices reached $33.75 a barrel before falling back slightly. Spiraling oil prices were blamed in part for a sluggish performance on Wall Street, where the Dow Jones industrial index rose a meager 3.22 points to 2,567.33. Previous oil price run-ups have contributed to economic slowdowns.
Prices of gasoline and heating oil also rose Monday but not so dramatically. The price of October regular unleaded gasoline closed up 1.31 cents a gallon to 91.6 cents, and home heating oil increased 2.52 cents a gallon to 85.31 cents. Market analysts and traders said the rise in crude oil prices shows no signs of slowing, and prices may top $35 a barrel this week. “That’s what (traders) hope,” said Tom Bentz, director of trading at United Energy, which deals in energy futures. “The market wanted to go higher. You could just feel it.”
U.S. energy markets followed the lead of European trading centers, where prices soared earlier. On the European spot market, where crude is bought and sold for cash, Britain’s widely traded North Sea Brent shot up $2.90 to $36.30 a barrel--the highest level in eight years.
The Europeans were apparently responding to rumors that the Soviet Union, the world’s No. 1 producer of oil, had suffered a break in a major pipeline. Soviet officials later denied the rumors.
More basically, Mideast tension continued to push oil prices higher.
“The Bush speech (televised in Iraq) did very little to ease tensions,” Bentz said. “In fact, it made (the Iraqis) more irate. There seems to be a feeling that this thing will come to a head” with warfare.
Higher futures prices also reflect oil company efforts to secure supplies for coming months, when the worldwide supply of crude shrinks as a result of the embargo on Iraqi and Kuwaiti oil. Iraq and Kuwait produced a combined 4.7 million barrels a day before the embargo.
“We are finally begining to feel the effects of the embargo,” said Andrew Lebow, an oil analyst at E. D. & F. Man International Futures Inc., a brokerage firm. As a result, “the crude market rally doesn’t seem to show any signs of abating.”
Traders noted that trading was relatively light, and many participants remained on the sidelines in a market that has become too volatile for their tastes. Under normal circumstances, traders said, they would have expected 100,000 contracts to have changed hands, given Monday’s surge in prices. Instead, only about 80,000 contracts were exchanged.
“I don’t see a broad (range) of participants,” Rothenberg said.
