LONDON - Oil firmed above US$61 on Thursday as two of the world's biggest oil firms, Exxon Mobil Corp. and Royal Dutch Shell Plc., raked in record profits from red-hot prices and drew sharp words from US Energy Secretary Sam Bodman.
The news came two days after rival BP Plc.
reported a sharp rise in its earnings and said profits would have been higher still if hurricanes had not hammered its US output.
The cost of a barrel of US crude has surged nearly 50 per cent since the start of the year and hit an all-time high of US$70.85 two months ago when Hurricane Katrina thundered into US oil refineries and rigs in the Gulf of Mexico.
The world's biggest consumer is vulnerable to any further supply disruptions that could leave it short of petrol and winter heating oil. Bodman called on oil firms to build new plants to pump out fuel.
"These companies are turning in record profits -- they have a responsibility to expand refining capacity," Bodman told a Senate Energy Committee hearing.
No new plants have been built in the United States since the 1970s even though US consumption has steadily increased.
US data on Wednesday showed big crude imports last week had bolstered stocks. But as America's Northeast, the world's biggest heating oil market, prepares for a cold winter, stocks of distillates -- heating oil and diesel -- fell.
US crude CLc1 settled up 43 cents at US$61.09 a barrel. London Brent crude LCOc1 was up 27 cents at US$59.14.
"In short, this week's figures flatly contradict the 'massive demand destruction' hypothesis," analysts at SG Commodities in Paris said in a report.
Man Financial noted in a study of US petrol consumption that drivers may cut down on mileage in times of high pump prices, "but only at the margin." "Although many polls show that US consumers are intent on altering their behaviour (i.e., driving less), we still have not seen significant structural shifts in behaviour," Man Financial analyst Edward Meir said.
The world's largest publicly traded oil company, Exxon Mobil Corp., said quarterly earnings leapt 75 per cent to nearly US$10 billion -- one of the highest quarterly profits in US corporate history.
Earlier, Royal Dutch Shell Plc reported a 68 per cent jump in third-quarter profit as high oil prices more than compensated for losses due to US hurricanes.
The world's third-largest oil firm said its current cost of supply net profit, which strips out gains from rises in the value of fuel inventories, rose to US$7.4 billion.
Hanging over European fuel markets was a strike threat at Europe's biggest refinery, Shell's 418,000 barrels-per-day Pernis plant in Rotterdam. Workers are threatening to walk out on Monday afternoon in a dispute over pensions.
Workers in Belgium are planning a one-day strike on Friday over government plans to raise the retirement age. It is not yet clear whether the action will affect plants around Antwerp. Esso Benelux said it expected no impact on its 246,000 bpd plant.
Oil cartel Opec pumped around 30.3 million barrels per day in October, little changed from September, tanker-tracking consultancy Petrologistics said.
Opec agreed at its meeting last month to offer every last barrel of its spare capacity to bring down prices, but refiners are already running at full tilt.
In addition, the extra oil Opec is offering is generally high in sulphur and some refiners find it difficult to process into petrol.
- REUTERS
LONDON - Oil firmed above US$61 on Thursday as two of the world's biggest oil firms, Exxon Mobil Corp. and Royal Dutch Shell Plc., raked in record profits from red-hot prices and drew sharp words from US Energy Secretary Sam Bodman.
The news came two days after rival BP Plc.
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