Oil Again Sets New High

The September contract closed up 90 cents to $65.80 on Nymex.
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Updates from 11:42 a.m. EDT

Oil jumped yet again Thursday as a reading on natural gas inventories came in light. Prices also got support after an influential energy consultancy said this year's runup in energy prices has done little to squelch global demand.

Crude for September delivery closed up 90 cents to another record high of $65.80 on Nymex.

Gasoline futures reached a new record high, rising 5 cents to $1.95 a gallon. Natural gas was up 26 cents to $9.33 per thousand cubic feet after the Energy Department said storage inventories rose by a smaller-than-expected 43 billion cubic feet last week.

"It's apparent that $65 oil is still not high enough to change demand patterns," said Bill O'Grady, director of market analysis at A.G. Edwards. "You will know when the demand change hits when you see your neighbors replacing their SUVs with sedans, but that hasn't happened yet."

On Thursday, the International Energy Agency, a private consulting group whose pronouncements on energy trends are widely followed, lowered its estimate of daily crude demand by 150,000 barrels, citing revisions to historical figures.

More ominously, the group said, worldwide demand for energy has been pretty much unaffected by surging commodity prices. "The world economy is still largely responding to last year's rise in price, and has yet to feel the full force of this year's increase," it said.

The IEA said oil prices have also taken little note of steadily building inventory levels, a trend that was reflected in Wednesday's Energy Department report, which showed solid gains in crude and distillate stocks. The market chose to focus on a decline in gasoline inventories amid a spate of refinery problems around North America.

According to the IEA, oil production North America and Britain's North Sea declined in July by 205,000 barrels a day due to summer outages. The agency revised down its 2005 non-OPEC supply estimate to 50.8 million barrels a day.

Meanwhile, heightened political tensions in Iran and Saudi Arabia supported crude and other commodity prices. Gold futures rose nearly $5 to $446.8 an ounce earlier.

Among companies Thursday,

Occidental Petroleum

(OXY) - Get Report

saw its shares upgraded to buy at brokerage AG Edwards. The brokerage cited strong production results and a robust exploration portfolio. Shares rose 1.2% to $83.12.

Pipeline company

Kinder Morgan Partners

(KMP)

fell Thursday after pricing 5 million partnership units at $51.25 apiece last night.

ConocoPhillips

(COP) - Get Report

authorized the repurchase of up to $1 billion of its common stock over a period of two years. This company still has $50 million left under a previous authorization. ConocoPhillips rose 0.8% to $66.15.

Among other energy stocks,

BP

(BP) - Get Report

fell 0.4%,

Exxon Mobil

(XOM) - Get Report

rose 0.9% to $60.10, and

Chevron

(CVX) - Get Report

dropped 0.4%.