Oil is expected to keep getting higher through 08 and 09 (see last two lines).
Oil Rises to $97 on Speculation U.S. Supplies Dropped Last Week
By Grant Smith
Jan. 2 (Bloomberg) -- Crude oil futures rose above $97 in New York, extending last year's 57 percent gain, on speculation that U.S. stockpiles fell for a seventh week.
Oil also gained after militant attacks in Nigeria, Africa's biggest crude producer, increased concern that violence will deepen production cuts. A U.S. Department of Energy report tomorrow will show a drop in crude inventories last week, from their lowest in almost three years, a Bloomberg survey showed.
``The market's kicked off higher on expectations of another crude stock draw,' said Robert Laughlin, a senior broker at MF Global Ltd. That's ``combined with renewed violence in Nigeria and terror worries in Pakistan.'
Crude oil for February delivery climbed as much as $1.35, or 1.4 percent, to $97.33 a barrel in electronic trading on the New York Mercantile Exchange. It was at $97.32 at 11:22 a.m. London time.
Last year, prices surged $34.93 a barrel, the biggest annual percentage increase since 2002. New York futures reached a record $99.29 on Nov. 21 as a weaker dollar made crude cheaper in other currencies.
Forecasts for colder winter weather in the U.S. added support to crude prices.
A winter storm in the U.S. northeast, where four-fifths of the country's heating oil is consumed, may boost demand. A storm that swept east from the Great Lakes could drop as much as 14 inches (36 centimeters) of snow on parts of northern New England today.
Brent Crude
Energy usage for heating in the Northeast is expected to be ``much above normal' today and tomorrow and then fall to below normal, said a forecast yesterday from Meteorlogix LLC.
Brent crude for February settlement rose as much as $1.88, or 2 percent, to $95.73 a barrel on the ICE Futures Europe exchange. It traded at $95.69 at 11:23 a.m. London time.
The London benchmark rose 54 percent last year, the most since 1999, when prices more than doubled. The New York and London exchanges were closed yesterday for New Year's Day.
Oil advanced 2.9 percent in New York last week after the assassination of former Pakistani Prime Minister Benazir Bhutto sparked concerns of instability in the nuclear-armed nation.
U.S. crude oil stockpiles probably dropped 3.15 million barrels in the week ended Dec. 28, from 293.6 million barrels the week before, the lowest since the week ended Jan. 14, 2005, according to the median of responses by four analysts before the Energy Department report.
Gulf Coast
All the analysts said supplies dropped last week, citing increased processing rates to make fuel and a drop in inventories in states along the Gulf Coast.
``If those numbers continue to run to the negative, that could be a factor that will put upward pressure on oil prices,' said David Moore, a commodity strategist at Commonwealth Bank of Australia in Sydney.
Nigerian militants killed 12 people in the southern oil city of Port Harcourt in attacks on two police stations and a hotel, the state-run News Agency of Nigeria said yesterday, citing Felix Ogbaudu, the regional police chief.
Violence by militants has reduced Nigeria's output by 20 percent since the start of 2006.
``Longer term, all the energy sectors will trend higher in 2008 and 2009,' Peter McGuire, managing director of Commodity Warrants Australia in Sydney, said in an interview today. ``There are geopolitical tensions, there are a number of other factors that can contribute to price rises.'
