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Crude Oil Prices Rise as U.S. Adds to Emergency Stockpile

November 14, 2001|Bloomberg News

Crude oil prices rose 2% after the U.S. said it would buy oil to add to the nation's Strategic Petroleum Reserve.

President Bush wants the reserve filled to its 700-million-barrel capacity. It now holds about 545 million barrels and an additional 48 million was scheduled for delivery. Prices dropped to a two-year low last week because of slowing demand and pessimism that OPEC would be able to rein in production enough to prevent further declines.

"It makes good sense for the U.S. to have several days more supply in storage just in case of a problem," said Mordechai Abir, director of energy and geopolitical research at Hoenig & Co. in New York. "And it helps the Saudis by supporting prices" before today's meeting of OPEC ministers.

Crude oil for December delivery rose 44 cents, or 2.1%, to $21.67 a barrel on the New York Mercantile Exchange. Prices are down 37% from a year ago, when oil was rising toward a 10-year high of about $36 a barrel.

New York futures prices have dropped 22% since Sept. 11, as traders have been more concerned about weakening demand than any possible disruption in Middle East supplies. Prices are down about 3% since the U.S. and Britain began bombing Afghanistan on Oct. 7.

Bush's announcement comes as the Organization of Petroleum Exporting Countries prepares for a meeting today in Vienna, where it might agree to reduce production quotas for the fourth time this year.

OPEC has trimmed its targets by 3.5 million barrels a day.

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