AP
Oil Hits Record Above $90 on OPEC Report
Thursday October 25, 4:23 pm ET
By John Wilen, AP Business Writer
Report That OPEC Won't Lift Production Quotas Lifts Crude Oil Prices Back Above $90 a Barrel


NEW YORK (AP) -- Oil futures jumped to a new record close of $90.46 a barrel Thursday on news that OPEC production increases aren't coming as fast as expected and that the cartel won't announce new output quotas when it meets next month.

Prices rose in early trading on growing concerns about conflict in the Middle East and declining supplies of crude in the U.S. They got a further boost after Dow Jones Newswires reported that Oil Movements, a company that tracks oil tanker traffic, said crude shipments from Organization of Petroleum Exporting Countries members will grow more slowly than anticipated through early November.

Meanwhile, OPEC Secretary General Abdalla el-Badri told The Wall Street Journal Asia the cartel is not in discussions to boost production by 500,000 barrels. El-Badri's comments counter rumors that Saudi Arabia is pushing for a production increase. In September, OPEC bowed to Saudi pressure and announced a production increase of 500,000 barrels a day, effective Nov. 1.

"It shows a little drama in the cartel," said Phil Flynn, an analyst at Alaron Trading Corp. in Chicago.

Light, sweet crude for December delivery rose $3.36 to settle at $90.46 a barrel on the New York Mercantile Exchange after rising as high as $90.60 earlier, a trading record.

Geopolitical events influenced early trading, with crude rising after Lebanese troops fired on Israeli warplanes. A conflict between Israel and Lebanon wouldn't itself have much impact on oil supplies, but traders worry that any hostilities in the Middle East would eventually draw in big oil producers such as Saudi Arabia and Iran.

Energy traders also remain concerned that a threatened incursion by Turkish armed forces into Iraq in search of Kurdish rebels would cut oil supplies out of northern Iraq.

On Wednesday, crude prices jumped sharply after the Energy Information Administration reported that oil inventories fell by 5.3 million barrels last week, much more than analysts expected. That report reversed a three-day downward price trend, and put energy traders back in a bullish mood, analysts said.

"Yesterday's EIA report pretty much changed the personality of the market," said Jim Ritterbusch, president of Ritterbusch and Associates in Galena, Ill.

In other Nymex trading, November gasoline rose 8.83 cents to settle at $2.2358 a gallon, and November heating oil added 6.64 cents to settle at $2.4084 a gallon.

November natural gas rose 21.6 cents to settle at $7.188 per 1,000 cubic feet as traders shrugged off a government report that inventories grew by 68 billion cubic feet last week, more than analysts had expected, and focused instead on forecasts for colder weather in the Midwest and Northeast and the possibility that a storm system in the western Atlantic could develop into tropical strength as it moves into the Caribbean Sea.

In London, December Brent crude rose $3.11 to settle at $87.48 a barrel on the ICE Futures exchange.

At the pump, gas prices slipped 0.2 cent overnight to a national average of $2.82 a gallon, according to AAA and the Oil Price Information Service.

Associated Press Writer George Jahn in Vienna contributed to this report.