Crude Prices Shoot Above $45 a Barrel
Crude oil futures (search) prices shot above $45 a barrel Thursday morning after an initial spurt of buying created momentum that forced investors who had been expecting lower prices to cover their bets.
"We have a great deal of investment funds that are trading crude oil right now, a lot of end users that are hedging in the market and producers in the Far East that are trading in crude," said James Cordier, president of Liberty Trading Group in St. Petersburg, Fla. "We get to where we're going a lot faster than we used to."
Light sweet crude for February delivery soared $1.66 to $45.05 a barrel in late morning trading on the New York Mercantile Exchange (search), and heating oil was marginally lower at $1.2165.
Cordier said there was considerable resistance at the $44 a barrel level, but that once that was surpassed, prices moved higher very fast.
Brent crude was up $1.34 cents at $41.85 a barrel on London's International Petroleum Exchange.
On Wednesday, oil prices fell after a U.S. government report showed larger-than-expected increases in winter fuel supplies, sending heating oil prices lower too.
The Energy Department's (search) statistical arm reported Wednesday that supplies of distillate fuel, which include heating oil and diesel, grew by 2 million barrels last week to 121.1 million barrels. The increase was much higher than expected, though it still leaves inventories 11 percent below year ago levels, according to the Energy Information Administration.
High-sulfur distillates used for heating oil increased by 1.2 million barrels to 50.1 million barrels, about 9 percent below year ago levels.
While oil prices are well below the late October high above $55 a barrel, traders remain wary about tight heating oil supplies in the United States and about possible supply disruptions in Iraq and terrorist activity in Saudi Arabia, the world's top supplier of crude oil.
Markets were rattled throughout 2004 by stronger-than-expected demand and persistent supply fears and unrest in key producers Saudi Arabia, Russia, Venezuela, Nigeria and Iraq.
U.S. and Norwegian producers have also been working to restore production caused by leaks and storms.