Crude Oil Rises After Attack on U.S. Consulate in Saudi Arabia

17

Crude oil rose from a three-month low after an attack on the U.S. Consulate in Jeddah, Saudi Arabia, boosted concern that a revival of terrorist attacks in the

country might threaten oil shipments from the world’s biggest oil

exporter.

Three attackers were killed, and two others wounded and

captured, according to the statement on the state-run Saudi Press

Agency. Oil prices jumped in June after an attack on a housing

compound by militants with suspected al-Qaeda links. The number

of attacks fell this summer as the police conducted a crackdown

and al-Qaeda supporters took advantage of an amnesty.

“Terrorist attacks appeared to drop off a great deal since

the early summer but that calm appears to be over,” said Bill

O’Grady, director of fundamental futures research at A.G. Edwards

& Sons Inc. in St. Louis. “It shows that al-Qaeda in Saudi

Arabia isn’t dead.”

Crude oil for January delivery rose 61 cents, or 1.4 percent, to $43.15 a barrel at 10:25 a.m. on the New York Mercantile Exchange. Oil has declined 22 percent from a record of $55.67 on Oct. 25. Prices were 40 percent higher than a year ago.

In London, the January Brent crude-oil futures contract rose

57 cents, or 1.5 percent, to $39.93 a barrel on the International

Petroleum Exchange. Brent futures have declined 23 percent since

reaching $51.95 on Oct. 27, the highest since the contract began

in 1988.

Reports of surging U.S. crude oil and petroleum-product

inventories helped push prices lower last week. Oil in New York

plunged 14 percent last week, the biggest weekly decline since

March 2003, when U.S.-led forces invaded Iraq.


OPEC Production

Crude-oil production by the Organization of Petroleum

Exporting Countries fell in November, the first decline in seven

months, as Iraqi output dropped, a Bloomberg survey showed.

Production by all 11 OPEC members fell 570,000 barrels, or

1.9 percent, to an average 29.97 million barrels a day, according

to the survey of oil companies, producers and analysts. OPEC

pumped a revised 30.54 million barrels a day in October, the

highest rate since December 1979, according to figures from the

U.S. Energy Department.

Saudi Arabia reduced daily production by 60,000 barrels to

9.72 million barrels, the first decline in seven months. In

October Saudi output was the highest since Aug. 1981, according

to Energy Department figures.

OPEC should consider cutting production to end a slide in

prices that has seen the group’s daily crude revenue decline

close to 25 percent in six weeks, Kuwait’s oil minister said on

Dec. 4. OPEC meets in Cairo on Dec. 10 to discuss production for

the first quarter of 2005.