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Strategies & Market Trends : Natural Resource Stocks

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To: isopatch who started this subject	8/3/2004 7:16:11 AM
From: c.hinton	Read Replies (1) of 108972

Crude hits new highs on capacity fears By Neil Dennis Published: August 3 2004 10:36 \| Last updated: August 3 2004 10:36 Downbeat views from oil cartel Opec on what it can do to take the heat out of rising crude prices, caused another record high above $44 a barrel for Nymex WTI on Tuesday. Producing at levels near full capacity, Opec president Purnomo Yusgiantoro said on Tuesday that the cartel’s producers had no extra oil to immediately supply the market to help cool the market. By midday, Nymex WTI for September delivery stood at $44.06 a barrel, just off a fresh record high of $44.24 hit in Asian trade. IPE Brent crude was at $40.29 a barrel, off its session high of $40.45 a barrel. ”The oil price is very high, it’s crazy. There is no additional supply,” Mr Yusgiantoro said “Saudi Arabia can increase production, but cannot do it immediately.” Although he has made comments about the lack of spare capacity before, it was the first time Mr Yusgiantoro had appeared so concerned about Opec’s inability to keep the market better supplied. ”It is undeniable that Opec spare capacity looks worryingly low by historical standards,” said Kevin Norrish at Barclays Capital. “Saudi Arabia has confirmed that it can take production up to 10.5m barrels a day “immediately” though in the current environment the damage is probably already done and it is unlikely that the Saudi response will result in oil prices falling back by much in the short-term,” Mr Norrish added.

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