Crude oil rose to a record $79.29 a barrel in New York after supplies dropped the most this year. U.S. oil inventories fell 7.01 million barrels to 322.6 million last week, the Energy Department said yesterday. Prices also rose after OPEC said it would increase production by 500,000 barrels a day, less than some analysts expected.
Due to its historically low spare production capacities, there is not too much OPEC could do now. Even if the actual production additions appear to be higher than stated, we believe it is still not enough to fill the gap between the supply and demand on the market. According to IEA the demand for crude is expected to rise by 2mbbl/d from the third to the forth quarter this year, which, we believe would push the inventories further down. As we mentioned yesterday we see the fundamentals very strong, which supports our bullish stance on the crude oil price in 2007 and beyond. We stick to our forecast of US$ 68.5/bbl for 2007. This favorable price environment should be supportive for upstream exposed stocks as (45 EUR, 1,03%) and Petrom.