<font color=brown>Its the economy, stupid!<font color=black>
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Oil Hits Fresh Highs on Supply Fears
Fri Jul 30, 2004 08:59 AM ET
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By Meg Clothier
LONDON (Reuters) - U.S. oil prices hit fresh record highs on Friday on fears of a disruption in supplies from world number two exporter Russia and doubts over oil cartel OPEC's ability to make up for any shortfalls.
OPEC is pumping at more than 95 percent of capacity, the highest for a quarter of a century, giving it little room for maneuver in an emergency.
U.S. light crude (CLc1: Quote, Profile, Research) struck $43.34 a barrel, the highest in its 21-year history on the New York Mercantile Exchange. It was last trading at $43.20, up 45 cents.
In London, Brent crude (LCOc1: Quote, Profile, Research) scaled heights not seen since the Gulf War, peaking at $39.90, before trading at $39.67.
Oil staged its first assault on historic highs on Wednesday after news Russian oil giant YUKOS might face a ban on oil sales while courts try to enforce a multi-billion-dollar tax debt.
Prices retreated after Thursday's reprieve by the justice ministry allowed YUKOS to keep pumping, but the market remains on edge over the company's fate.
"There's a sense with YUKOS of postponing the inevitable. YUKOS's financial problems will get worse in the coming weeks and the market is very nervous that we will see some of its 1.7 million barrels a day shut in for some period," said Steve Turner, an oil analyst at Commerzbank Securities.
YUKOS has said the company could collapse by mid-August because of a freeze on its bank accounts and assets, adding that its rail shipments of oil, which make up a quarter of its total sales, could be affected soon.
YUKOS, whose former CEO Mikhail Khodorkovsky is on trial for tax evasion and fraud, pumps a fifth of Russian oil.
IRAQ VIOLENCE FEAR
Traders also remain wary over accelerating Iraqi oil flows after repeated export disruptions this summer.
Continued ...
reuters.com |
