Crude jumps above $30 for first time since 1991

Motorists might face mean jolt at gas pump

Oil

February 15, 2000|By NEW YORK TIMES NEWS SERVICE

The price of crude oil jumped to more than $30 a barrel yesterday for the first time since the 1991 Persian Gulf war, and a sharp run-up in gasoline prices looks increasingly likely this summer.

The price of crude oil neared $30 in mid-January, slipped and then rallied again last week. All the time, traders were weighing concerns about declining inventories of crude oil, home heating oil and gasoline against the possibility of a production increase from major oil producers when they meet at the end of March.

As new data showed some inventories tightening last week, only promises of increased production from OPEC officials kept the price of crude oil from piercing $30.

But several reports yesterday put a damper on the prospect of a production increase, and the $30 barrier was breached. The price of crude oil for March delivery on the New York Mercantile Exchange jumped 81 cents to $30.25 a barrel.

Of course, new comments from OPEC officials holding out the hope of production increases could depress the price again.

Yesterday's comments contradicted what appeared to be clear signals last week that Venezuela and Saudi Arabia would ask for an increase by June at a meeting of OPEC countries at the end of next month.

Even if the producers relent, the production cuts that began last March -- equal to 4.3 million barrels a day -- already might have set the stage for a sharp rise in gasoline prices later this year and a stronger political response from the United States and Europe.

"If OPEC eases in June, it's too late," said Irene King, senior oil markets analyst for J. P. Morgan Securities, referring to peak gasoline demand in the summer travel season.

Because of the lag time between increased crude oil production and the refining of gasoline, King said, "we will have to go through all the holidays with very low gasoline inventories. That would make the heating oil squeeze we had a few weeks ago look like a piece of cake."

Retail gasoline prices, according to the Department of Energy, rose to $1.356 a gallon this week, up 48 percent in the past year and the highest since late 1990.

In the futures market, the price of unleaded gasoline for March delivery rose 2.3 cents yesterday to 83.41 cents a gallon.

Gasoline is now well above the price of home heating oil, which rose 1.5 cents to 75.70 cents a gallon yesterday. Still, it is far below the 95.20-cents-a-gallon price of Jan. 31.

Energy Secretary Bill Richardson has no plans now to dip into the United States' Strategic Petroleum Reserve, although he is being pressured to do so by Northeastern politicians, including Sen. Charles E. Schumer, a New York Democrat.

A spokesman for the Energy Department said yesterday that this was "not an option in the current environment, and the last four words are key."

While the weather has moderated for now in the Northeast, reducing concern about home heating oil inventories, gasoline prices could be thrust into the spotlight as the California presidential primary nears.

Richardson is scheduled to meet with energy officials in Saudi Arabia and Kuwait at the end of the month, but he canceled a meeting with Venezuelan oil officials because of a scheduling conflict.

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