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Markets & Stocks
Oil prices edge higher
November 15, 2000: 1:19 p.m. ET

Decline in U.S. heating oil stocks raises supply concerns as winter nears
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NEW YORK (CNNfn) - Oil prices edged higher Wednesday after a decline in already depleted heating oil stocks in the United States and a threatened halt of Iraqi  exports sent shivers through the global oil market.

Light crude oil for January delivery rose 39 cents to $34.35 a barrel. And Brent crude oil for January delivery advanced 45 cents to $32.60., but still some way below a 10-year high of $35.30 hit last month.

With colder weather approaching, winter supply jitters were reinforced by data from the American Petroleum Institute that showed a 665,000-barrel drop in U.S. heating oil stocks leaving supplies more than 30 percent below this time last year.

The data were confirmed Wednesday afternoon by a Department  of Energy report that showed a 500,000 barrel drop in heating oil supplies but a rise in crude and gasoline stocks.

"Crude and heating oil inventories remain alarmingly, stubbornly low," U.S. Secretary of Energy Bill Richardson told executives and ministers at a lunch in London.

Higher oil processing and a dip in supply will have a ripple affect on the U.S. economy, said John Davidson, chief investment officer at Orbitex Group of Funds in an interview with CNNfn Wednesday. 

"The consumer's really going to feel the pinch and I think that's going to bring a slowdown. In fact, it's the energy prices that I think is the reason that I believe that Greenspan will not be raising rates any time in the future and may be lowering them some time next year, he said.

Iraq seeks 50-cent premium

Adding to the concern, Iraq, which sells about 5 percent of the world's crude oil exports, has informed its customers that Beginning Dec. 1 it wants a 50 cent a barrel premium outside United Nations-controlled accounts.

"They've contacted everybody by phone. [They said] the ones who don't do it won't get new contracts," one crude oil trader with a European company said.

But most major companies say they won't be able to comply with the request as it would mean circumventing the U.N.'s sanctions on Baghdad, which require funds from the sale of oil put into special escrow accounts for food and humanitarian aid.

This sets up yet another potential conflict between Iraq and the U.N. after a series of moves in the past few weeks, including a switch for payment to euros from dollars and a request to extend the current oil-for-food program.

  graphic DID API IMPACT PRICES?  
    Prices were pushed higher after the latest American Petroleum Institute (API) data showed that U.S. distillate stocks shrank by 55,000 barrels in the week ended November 10.
   
The constant threat of interruption to the supply of oil has kept markets on edge, particularly with a cold front now headed to the U.S. northeast, where heating oil stocks are about 40  percent below last year's level.

In October the U.S. started to release 30 million barrels of specially held reserve crude oil in an effort to ease prices off highs not seen since the 1990 Gulf War.

OPEC ministers Monday gave little cause for markets to retreat as they ratified an agreement to keep output quotas  unchanged after raising supplies four times this year.

The API also reported big increases in weekly crude and gasoline stocks, by 2.52 million and 3.42 million barrels respectively, but prices were driven largely by the distillate stock draw amid forecasts of below-normal U.S. temperatures this week and next.

OPEC meets again Jan. 17, by which time analysts expect a year-to-year inventory deficit to have turned into a surplus.

-- from staff and wire reports. graphic

  RELATED STORIES

OPEC leaves output on hold, meet January for cut - Nov. 13, 2000





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Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer. Morningstar: © 2018 Morningstar, Inc. All Rights Reserved. Factset: FactSet Research Systems Inc. 2018. All rights reserved. Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor's Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2018 and/or its affiliates.