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French Version

Oil prices smash new records heading to $52

Oil prices smashed new records closing above $51 a barrel in Asian trading Wednesday as analysts warned $60 was "within reach" if the northern winter turns out colder than expected.

In midday trading in New York benchmark light crude was at $51.85 a barrel, up from its record close of $51.09 at the New York Mercantile Exchange on Tuesday.

Tuesday's upturn put prices 70 percent higher than 12 months ago, when they were around $30.40.

"If the (northern hemisphere) winter turns out to be colder than anticipated, the markets will run," said Esa Ramasamy, director for Asian oil markets reporting at Platts, an energy agency whose analyses are widely used as benchmarks for international spot trading.

"If this happens, you will see $55 as not a problem any more. It becomes a reality and $60 is within reach," Ramasamy said.

The winter months in the northern hemisphere traditionally drive up demand for kerosene and diesel, which are used for heating.

Ramasamy said refineries have already started building their inventories for diesel and kerosene, leading to a sharp rise in demand.

"No refinery will keep low on inventories in winter and because the refining margin is so good, every refinery is running full capacity. Once that happens, there is a natural demand for crude," he said.

On the flip side, Ramasamy said that a warmer than expected winter should cause prices to fall due to the high level of inventories.

Ng Weng Hong, editor of industry publication EnergyAsia.com, agreed that a colder winter will drive prices up further, with the continued violence in Iraq and other potential disruptions to oil supplies contributing to the volatility.

"It's going to go up, it's going to be one-way traffic," he said.

"I think the immediate target is $55 but whether we hit it or not is another matter," he added.

Beirut,10 11 2004
The Daily Star
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