OPEC ministers and delegates have said in the past week there's no need to boost production, signaling they may resist calls to bolster global supplies. Natural gas in New York extended yesterday's biggest jump in seven months after the attacks on three oil and gas pipelines in the energy hub of Mexico's Veracruz state, the third guerrilla strike on the state oil company's distribution network since July.
``OPEC will be very prudent and stay until the last minute about making a decision. They may move into action if it gets dangerously close to $80 to calm the market,'' said Tony Regan, an energy consultant at Nexant Inc. in Singapore. ``Headlines are currently driving the market and the news from Mexico did just that to push prices higher,''
Crude oil for October delivery rose as much as 83 cents, or 1.1 percent, to $78.32 a barrel in after-hours electronic trading on the New York Mercantile Exchange, its seventh day of gains. It was trading at $77.71 at 3:03 p.m. in Singapore. New York futures reached a record $78.77 on Aug. 1.
The contract gained 79 cents, or 1 percent, to $77.49 a barrel yesterday, the highest close since July 31. Oil traded as high as $78.47 after settlement.
Natural Gas, Mexican Blasts
Gas for October delivery yesterday rose 39 cents, or 7.1 percent, to $5.891 per million British thermal units at the settlement of floor trading on the New York Mercantile Exchange. It was the highest percentage gain since Jan. 30, when gas advanced 12 percent. In after-hours electronic trading, gas rose 0.2 percent to $5.903 at 3:01 p.m. Singapore time.
The six explosions that shut down lines carrying crude oil, natural gas and propane were ``premeditated acts,'' state-owned Petroleos Mexicanos said in an e-mailed statement yesterday. About 12,500 people were evacuated after the blasts at 3 a.m. New York time, Veracruz Governor Fidel Herrera said on Mexico City-based Radio Formula. Pemex reported no injuries or damage outside its facilities.
The blasts today follow two separate pipeline bombings in July that disrupted natural gas for thousands of residents and businesses in four central states. The damage to industrial production from this attack may be greater because it affects a larger gas pipeline and lines that connect to Mexico City and Guadalajara, the country's second-largest city, said David Shields, an independent energy analyst in Mexico City.
A guerrilla group that calls itself the Popular Revolutionary Army claimed responsibility for the blasts on July 5 and July 10. No one has taken responsibility for today's attacks.
OPEC
Oil also rose on speculation rising demand and restricted OPEC production may tighten fourth-quarter supplies.
The Organization of Petroleum Exporting Countries pumps 40 percent of the world's oil and will set its output target for the rest of the year at a meeting in Vienna today. It will probably maintain its current ceiling because of ample supplies and the prospect of slowing U.S. demand, officials said.
Venezuelan Oil Minister Rafael Ramirez told reporters today OPEC has no need to change production quotas, while his Qatari counterpart said the group has different options to consider when it meets later today.
The Organization of Petroleum Exporting Countries has ``a lot of options,'' Qatar Oil Minister Abdulla bin Hamad al- Attiyah said today in Vienna, where OPEC will meet to determine production quotas for the fourth quarter.
Libya's top oil official, Shokri Ghanem, said in an interview late yesterday the best and most likely outcome of today's meeting would be to keep OPEC's limits on production unchanged.
Increase Mooted
``If there was possibly going to be an increase they would have hinted at it earlier,'' said Tom Hartmann, commodity broker at Altavest Worldwide Trading Inc. in Mission Viejo, California. Traders are bullish and ``it could be they're not going to sell until they get to $80,'' he said.
A 500,000 barrel a day quota increase will be discussed during OPEC's meeting and the timing of any increase remains undecided, two OPEC delegates said. The second delegate said he doubted other members would agree to such an increase. Both officials declined to be identified before the start of official talks at the group's Vienna headquarters.
Brent oil for October settlement rose as much as 47 cents, or 0.6 percent, to $75.95 a barrel on the London-based ICE Futures exchange. It was at $75.60 at 3:08 p.m. in Singapore.
The gain in New York futures yesterday widened the premium over Brent to $2.01 a barrel, the highest since Feb. 13. The October contract's premium over December widened to $2.41 a barrel, a record for the contracts and the biggest three-month spread for the Nymex contract nearest expiry since April 2003.
That strength is odd given ``it looks more and more likely there's something really to be concerned about in terms of global growth,'' Altavest's Hartmann said.
U.S., World Economy
U.S. share prices fell a second day yesterday after Federal Reserve officials suggested the nation's housing slump may be weighing on the economy.
The U.S. is the world's largest oil user. A report tomorrow will probably show its oil stockpiles fell for a ninth week in ten, based on the median estimate from a Bloomberg News survey of 12 analysts.
Inventories probably fell by 3 million barrels. They held 329.7 million barrels on Aug. 31, 10 percent more than the five-year average for the period.
World oil demand peaks in the fourth quarter when refiners make heating fuel for the northern hemisphere winter. OPEC cut Output last year to stem rising stockpiles and support prices.
``Today, there is no problem in supply and demand,'' Algerian Oil Minister Chakib Khelil told reporters yesterday. ``Maybe we will have a problem in the next few months. At this meeting, I don't think there is a consensus'' on a production increase,'' he said.
Saudi Arabia is the world's biggest oil exporter and the most influential member of OPEC. Oil Minister Ali al-Naimi declined to comment to reporters in Vienna yesterday.
