Crude oil price surges past US$55

Crude oil price surges past US$55

Associated Press, London

Crude oil prices surged past an unprecedented US$55 per barrel
on Monday as uncertainty swirls over production, high demand and
tight global supplies ahead of the Northern Hemisphere winter.

Crude for November delivery on the New York Mercantile
Exchange hit US$55.33 per barrel in pre-opening electronic
trading, up 40 cents from its Friday settlement price. By 1330GMT
(8.30 p.m. Jakarta time) the contract had slipped back to
US$54.75, down 18 cents. The November contract expires Wednesday.

Heating oil also hit a new peak Monday, while Brent crude for
December delivery hit a high of US$50.32 on London's
International Petroleum Exchange shortly after the trading
session opened. By 1330GMT, Brent also had pulled back, down 13
cents from Friday's close to US$49.80.

However, analysts said the markets were volatile, recording
large price swings over a weekly period, and prices are expected
to rise again.

Crude oil prices are the highest in a generation, rising by
around 80 percent from the beginning of 2004. However, even at
current levels, crude oil prices are still about 40 percent below
the all-time highs - in inflation-adjusted terms - of February
1981.

Prices have skyrocketed more than US$10 in the past month,
primarily over production delays in the Gulf of Mexico, where
Hurricane Ivan hit mid-September.

Now that the US$55 barrier has been surpassed, analysts are
looking toward US$60 a barrel, with some saying it may reach that
mark by the end of the year - smack in the middle of the Northern
Hemisphere winter.

"We hit the new milestone and we're looking at US$60," said
Victor Shum, oil analyst at Texas-headquartered energy
consultants Purvin & Gertz. "US$60 is certainly feasible."

Axel Busch, the chief correspondent for Energy Intelligence
Group in London, which plots energy developments, said the market
was a little overheated and would likely pull back initially.

"But will we hit US$60? Yes, I think we probably will," he
added.

Declines in U.S. distillate stocks just before the Northern
Hemisphere winter are the latest in a line of supply factors to
rattle the market.

The U.S. Energy Department said in its weekly petroleum supply
report last week that commercially available supplies of heating
oil declined by 1.2 million barrels for the week ending Oct. 8,
falling to 50.0 million barrels, or 10 percent below year-ago
levels.