biz.yahoo.com/ap/071015/oil_prices.html
Click Here AP Oil Futures Hit New Record of $86 Monday October 15, 2:19 pm ET By John Wilen, AP Business Writer Crude Prices Surge As OPEC Estimates Supplies Are Falling While Demand Is Growing NEW YORK (AP) -- Oil prices surged as high as $86 a barrel Monday for the first time after OPEC said crude production by non-member countries is likely falling even as global demand for oil is rising.
Prices were also supported by concerns Turkish forces will pursue Kurdish rebels into Iraq, disrupting oil supplies, and by technical buying by investment funds. Despite the Organization of Petroleum Exporting Countries' decision last month to boost its production by 500,000 barrels per day beginning next month, the rest of the world will likely produce 110,000 fewer barrels of oil per day than expected in the fourth quarter, OPEC said in a report. At the same time, fourth quarter demand for crude oil will grow by 100,000 barrels a day over last year, OPEC said. The estimates add to sentiment that crude supplies are tight. Last week, the Energy Department reported that domestic crude inventories fell during the week ended Oct. And the International Energy Agency concluded that oil inventories held by the world's largest industrialized countries have fallen below a five-year average. Despite the gains, oil is still below inflation-adjusted highs hit in early 1980. Depending on the adjustment, a $38 barrel of oil in 1980 would be worth $96 to $101 or more today. The Turkish government's decision on Monday to ask Parliament for permission to pursue Kurdish rebels into Iraq stoked worries that hostilities will disrupt oil supplies, analysts said. "Oil out of the northern (Iraq) fields has been erratic for some time," said Linda Rafield, senior oil analyst at Platts, the energy research arm of McGraw-Hill Cos. "But complete disruption would definitely be bullish for this market." Technical buying by investment funds is also driving oil's record run, analysts say. Data released Friday show that speculative buying of oil contracts increased last week. Many investment funds automatically buy or sell oil futures when prices hit certain levels. In recent days, as oil has pushed into new record territory, several of these resistance prices levels have been broached. "Funds tend to trade more on the technicals," Rafield said. Associated Press Writers Pablo Gorondi in Budapest and Gillian Wong in Singapore contributed to this report.
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