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Oil Prices Head Up As Arlene Heads To the Gulf

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Oil futures moved up today in New York amid fears of complications to Gulf supplies as Tropical Storm Arlene makes its way past Cuba and into the Gulf of Mexico.

Oil Heads Up As Arlene Heads To the Gulf

Oil futures moved up today in New York amid fears of complications to Gulf supplies as Tropical Storm Arlene makes its way past Cuba and into the Gulf of Mexico.

The main contract for July finished at $54.28, up $1.74 a barrel this afternoon after dynamic trading pushed it down in the $52 range yesterday. Brent crude from the North Sea also finished higher at $53.82, up $1.75 for the day.

The real stories though were gasoline and heating oil. Heating oil climbed 7 cents a gallon to 1.62 and gasoline shot up 7 cents to $1.57 a gallon. It probably won’t get any better either.

The industry is certainly uncertain as the summer moves on. The bulls continue to charge the market as they feed fears of supply problems in the 4th quarter. While the Energy Information Agency’s (EIA) report yesterday eased some tension as distillate fuel supplies rose more than expected, Arlene has picked up the slack as she moves through the Gulf of Mexico. There are a number of oilrigs in the gulf and refineries in the gulf coast region.

“The devastation caused by Hurricane Ivan last year to Gulf of Mexico oil platforms and other petroleum infrastructure demonstrated the impact a major hurricane could have on oil markets,” the EIA said in their report. “With very little spare production capacity available globally, the potential for damage to petroleum infrastructure may be a major concern to some oil market participants.”

The EIA reported yesterday that U.S. crude inventories dropped 3 million barrels to 330.8 million barrels after analysts in a Reuters survey anticipated a slight rise. Gasoline was expected to go up 900,000 and fell far short of that mark, actually going down 100,000 barrels. The report does say however that inventories are still far above the average for this time of year.

Distillates remain another area of close scrutiny. Distillate inventories went slightly more than anticipated, hitting 1.3 million vs. 1.1 million barrels a day. This is good because heating oil consumption has been unseasonably high during a time of year when supplies are expected grow and distillate prices on heating oil and diesel are expected to drop, something unseen yet this year.

OPEC has said they intend to increase their official capacity during their June meeting next week but experts feel this will have little effect because they all produce well above stated production levels. At 30.5 million barrels a day, OPEC has been running all out with little capacity for increase. Oil prices are expected to climb above $60 a barrel before the summers out. Unfortunatel, all solution to the fuel situation are long term. Nothing will help prices in the short term,

John Stith is a staff writer for WebProNews covering technology and business.

Oil Prices Head Up As Arlene Heads To the Gulf
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