The Wall Street Journal-20080212-Chavez Threat- Cold Snap Lift Crude 2- to --36-93-59
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Chavez Threat, Cold Snap Lift Crude 2% to $93.59
Full Text (572 words)Crude-oil futures surged to their highest close in nearly a month, lifted by tensions in oil-exporting countries, refinery outages and a Northeast cold snap.
Light, sweet crude for March delivery rose $1.82, or 2%, to close at $93.59 a barrel yesterday on the New York Mercantile Exchange, the highest front-month settlement price since Jan. 14.
Oil markets climbed after Venezuelan President Hugo Chavez on Sunday threatened to stop selling oil to the U.S. in response to Exxon Mobil Corp.'s legal moves to freeze assets of Venezuela's state-owned oil company. Exxon is seeking compensation for a stake in a project it walked away from last summer after Venezuela demanded contract changes.
Analysts doubt Mr. Chavez will deliver on his statements, noting he has issued similar threats in the past and any embargo would harm Citgo Petroleum Corp., the refining and marketing arm owned by a unit of Petroleos de Venezuela SA, the state-owned oil company. The rhetoric was enough to spook the market.
"The oil market has been confronting geopolitical threats for the past half decade as supply and demand balances have tightened into a fragile equilibrium," Lehman Brothers said in a note to clients. "The Venezuelan threat serves as a reminder that internal strife in Nigeria or Iraq or an attack on Iran to stop its development of nuclear energy could have significant price repercussions."
Word of a partial outage at Citgo's Lake Charles refinery in Louisiana and a power failure at a Valero Energy Corp. plant in Delaware City, Del., also spurred buying. Although both seem to be short-lived problems, "in this market, any refinery outage is clearly not good news," said Peter Beutel, president of Cameron Hanover, an energy risk-management firm in New Canaan, Conn.
Bitter cold in the Northeast also pushed prices higher. Front-month March heating oil settled 5.03 cents, or 2%, higher at $2.6044 a gallon.
After cresting above $100 a barrel as the year began, crude futures settled at $87.14 a barrel Wednesday amid concerns an economic slowdown could pinch oil-demand growth. Prices have staged a comeback since then as attention shifts to supply risks.
Later in the week, traders are expected to watch for U.S. oil inventories for direction.
In other commodity news:
COFFEE: Procter & Gamble Co. said it was raising prices for its Folgers ground coffee by 15 cents per 10.5- to 13-ounce can, effective immediately, reflecting recently higher green coffee prices. Folgers increased its instant coffee price by 24 cents per eight-ounce jar, or 6%. Folgers Singles prices and Folgers cappuccino prices were left unchanged, as were gourmet prices. Folgers last raised coffee list prices in late October. Cincinnati-based Procter & Gamble recently announced plans to make its Folgers coffee business a separate company with stock offered to shareholders.
WHEAT: Prices on the Minneapolis Grain Exchange jumped the newly expanded 60-cent trading limit as supply concerns continue to roil the market. MGE March wheat ended 60 cents higher at $16.13 a bushel. Nearby wheat futures at the Chicago Board of Trade and Kansas City Board of Trade ended sharply lower due to increased margin requirements and a move by traders to book profits.
PLATINUM: Prices on Nymex rose after Anglo Platinum Ltd., among the world's largest platinum producers, said production of the metal would decline for a second year as a power shortage in South Africa has followed safety-related problems that disrupted output in 2007. April platinum rose $55.40 to $1,939.40 an ounce.
