Oil Prices Stay Above $65 Per Barrel

Thursday, August 18th 2005, 10:58 am
By: News On 6

VIENNA, Austria (AP) _ Oil prices held above $65 a barrel Monday as traders weighed the effects of sabotage that forced Iraq's southern pipeline exports to a halt against partially resumed crude production in Ecuador.

Analysts cautioned against putting too much emphasis on the Iraqi outages, saying it was too early to say how long the shortfalls in output would last.

Light, sweet crude for September delivery on the New York Mercantile Exchange rose 30 cents to $65.65 a barrel by afternoon in Europe. The September contract, which expires later Monday, rose $2.08 a barrel on Friday after U.S. warships were fired upon in Jordan and production in Ecuador shut down.

Nymex crude for October delivery slipped 2 cents to $65.77 a barrel, after touching a high of $66.14 earlier. Front-month crude futures contracts reached an all-time high of $67.10 on Aug. 12 _ about 40 percent higher than a year ago.

Gasoline on the Nymex rose a quarter cent to $1.9062 a gallon. Heating oil rose more than a penny to $1.8360, indicating attention is shifting from gasoline near the end of the summer driving season in North America to heating oil for winter use.

October Brent crude rose 40 cents to $64.76 a barrel in London after server problems forced a trading halt for several hours.

Iraqi and foreign oil officials said Iraq's oil exports were shut down Monday by a power cut that darkened parts of central and southern Iraq, including the country's only functioning oil export terminals.

Exports through the country's other main route, the northern export pipeline to Turkey, have long been halted by incessant sabotage.

Iraqi officials said sabotage was also responsible for Monday's blackout, which prevented oil from being pumped into tankers waiting at berths.

Iraqi pipelines are a frequent target for insurgents, as a large quantity of the oil heads for Western nations and disrupting the flow of crude is seen as a way to destabilize the U.S.-supported government.

But chief analyst Ehsan Ul-Haq of PVM Oil Associates in Vienna said the Iraqi supply disruption was not yet a major market factor because ``it's still not quite clear whether (Iraqi) exports will be affected for a long time.''

Some stability came from South America, where Venezuelan President Hugo Chavez said his country will loan oil to Ecuador until its domestic production stabilizes, easing concerns that the Andean nation's export commitments to the United States might not be met.

``Chavez's move was quite good news for the market,'' said chief commodities strategist Tetsu Emori at Mitsui Bussan Futures in Tokyo, Japan. ``It came as something of a surprise to most because Chavez has always been bullish. But it's a welcome move.''

Violent protests erupted in Ecuador last Tuesday, bringing oil production to a standstill. Production partially resumed Saturday when demonstrators and the government declared a truce.

Ecuador's state-run oil company Petroecuador on Saturday restored 33,167 barrels of crude output in the northeast Amazon, but that was still about 168,000 barrels short of normal daily capacity.

Such an amount does not hurt actual supply, but the thin layer of spare capacity has markets on edge for any unexpected outage that could derail deliveries in a time of high demand.

Ecuador said production would not return to normal until October at the earliest.