Newspaper article THE JOURNAL RECORD

Oil Up to Highest Level since November 1987

Newspaper article THE JOURNAL RECORD

Oil Up to Highest Level since November 1987

Article excerpt

NEW YORK - Oil futures prices surged Monday to their highest levels since November 1987, pumped up by market speculation that members of the Organization of Petroleum Countries would be able to keep a cap on their output.

Analysts said they did not expect the spike in prices to have much effect on prices of home heating oil and gasoline unless it lasted for a considerable period of time.

The February contract for West Texas Intermediate, the benchmark grade of U.S. crude oil, jumped 40 cents to settle at $18.85 a barrel on the New York Mercantile Exchange.

The last time the near-month contract settled higher was Nov. 20, 1987, amid hostilities in the Persian Gulf in the Iran-Iraq war. It settled that day at $18.93.

Although Persian Gulf troubles no longer are an issue, the price of the near-month contract for West Texas Intermediate has soared 50 percent since an intraday low of $12.28 a barrel on Oct. 5.

One reason for the increase is speculation that some kind of production agreement may be reached at a meeting beginning Jan. 26 in London between members of the Organization of Petroleum Exporting Countries and non-OPEC countries, according to Gene Nowak, an analyst at Dean Witter Reynolds Inc.

Nevertheless, analysts said the latest surge seemed more the result of emotion than news.

``The main thing we've got getting this market up is momentum. I'd have to list that as the first cause,'' said Peter Beutel, assistant director of the energy group at Elders Futures Inc.

``There's no underlying structural reason. There's no shortage,'' said John Lichtblau, president of the Petroleum Industry Research Foundation.

Prices began rising in October on expectations that OPEC members would agree to cut production as a way of propping up prices. …

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