Friday, February 09, 2007

Oil back above $60

Crude oil is back above the $60 a barrel mark, as traders react on supply worries following an explosion at a California oil field owned by Occidental Petroleum. Bloomberg reports:

Crude oil rose above $60 a barrel for the first time in five weeks after an explosion shut down a California field owned by Occidental Petroleum Corp., the fourth- biggest U.S. oil company.

Occidental said about 120,000 barrels of oil and gas liquids a day has been lost after a fire at its Elk Hills site. It is the seventh-largest field on the U.S. mainland. Nigeria, Africa's biggest oil producer, will comply with production cuts set by the Organization of Petroleum Exporting Countries and has no plan to increase that limit, a spokesman said.

``The reaction to the closure of the oil field in California underlines the supply worries out there,'' said Michael Fitzpatrick, vice president for energy risk management at Fimat USA in New York. ``The field only produces 120,000 barrels of liquids a day. It really isn't going to have a noticeable impact of stocks.''

Crude oil for March delivery rose 69 cents, or 1.2 percent, to $60.40 a barrel at 1:12 p.m. on the New York Mercantile Exchange. Futures touched $60.61, the highest intraday price since Jan. 3. Prices are 2.3 percent higher this week and 3.5 percent lower than a year ago.

To the $35 a barrel, talking-head optimists: Sorry guys, but crude oil seems to be working its way higher the past few weeks after bottoming out below the $50 mark. Supply constraints are finally penetrating the minds of market participants and observers.

``There have been a number of stories that demonstrate that oil supplies aren't to be taken for granted,'' said Tim Evans, an energy analyst at Citigroup Global Markets Inc. in New York. ``The Occidental field was shut down yesterday, the Hibernia field in Canada is also shut, there are problems with the Cantarell field and Norwegian production is declining.''

Think we'll see a return to $75-$80 oil in the next six months?