The Associated Press

With crude oil prices soaring and hefty home heating bills anticipated this winter, analysts say the situation could get worse if oil producing countries do not act soon to increase supplies.

Thursday, September 07, 2000

With crude oil prices soaring and hefty home heating bills anticipated this winter, analysts say the situation could get worse if oil producing countries do not act soon to increase supplies.

”We really have the makings of an energy crisis here, for this winter,” said John Kilduff, a senior vice president at Fimat USA Inc. in New York, citing ”bad news for natural gas, oil and heating oil.”

With U.S. crude supplies hovering near 24-year lows and a world market thirsty for more oil, prices climbed 3 percent Wednesday into record territory.

West Texas Intermediate crude for October delivery rose $1.07 to $34.90 a barrel.

Prices have more than tripled since hitting a 12-year low of less than $11 a barrel in December 1998, before OPEC slashed production to force prices higher.

The European Union, wary of protests against soaring fuel prices in several EU nations, on Wednesday urged the Organization of the Petroleum Exporting Countries to lower prices when it meets Sunday in Vienna.

OPEC’s reluctance to raise production substantially has had a ripple effect across the spectrum of energy products, and analysts say the 500,000 barrels a day of additional production OPEC is expected to approve may not suffice to meet heavy world demand.

For natural gas, the total stored in the United States is now 401 billion cubic feet less than a year ago. That will leave supplies way behind average when the winter heating season starts.

Uneasiness about low supplies led to speculation that industry figures expected Wednesday from the American Petroleum Institute would show only a small increase in U.S. stockpiles from the previous week.

But the API report showed a bigger-than-expected increase of 3.13 million barrels in U.S. crude inventories, to 289 million barrels. But the rest of the energy supply picture was mixed, causing crude prices to rise over $35 in after-hours electronic trading.

Gasoline stocks were down 150,000 barrels, to 199 million barrels. And most notably for U.S. consumers worried about winter heating bills, distillate fuel stocks saw a much smaller-than-expected rise of 658,000 barrels, to 112.9 million barrels.

Kilduff said a production boost of at least a million barrels a day is needed to turn things around.