Oil hits record $63.99 on security threat
($63.95 four minutes ago, trending up this PM)
LONDON (Reuters) - Oil prices hit a new record high near $64 on Monday after warnings of militant attacks in the world's biggest oil exporter Saudi Arabia and on worries about refinery outages in the United States.
U.S. crude (CLc1) was up $1.49 at $63.80 a barrel at 1725 GMT after peaking at $63.99. London Brent crude (LCOc1) was up $1.49 at $62.56 a barrel after touching $62.70.
As the United States shut its diplomatic missions in Saudi Arabia in response to threats, Britain warned that militants were in the final stages of planning strikes in the kingdom.
"The latest security threats in Saudi Arabia, even though they're not directed at oil installations per se, and the continuing refinery issues are having a supportive role," said Marshall Steeves, an analyst at Refco Group in New York.
Concerns over the Saudi security situation coincided with news that another U.S. refinery had run into output problems, adding to pressure on gasoline supplies in the world's biggest consumer during peak summer demand.
News that OPEC's second largest producer Iran had resumed its nuclear work, despite European Union warnings of possible United Nations sanctions, further strained nerves.
In real terms, stripping out inflation, oil is still below the $80 a barrel on average for the year after the 1979 Iranian revolution.
But at an average of more than $53 for the year to date for U.S. crude, prices are well above those during the 1974 Arab oil embargo.
Encouraging dealers to push prices higher, energy inflation has yet to have a significant impact on economic growth, particularly in the world's biggest consumers the United States and China.
Naohiro Niimura, vice president at the derivatives division of Mizuho Corporate Bank, said the world's economy was coping with oil prices that have charged almost 50 percent higher since the start of this year.
"The (global) economy is tolerant to these high oil prices," he said.
"After the very strong pick-up in US growth data over the past few weeks, we believe the risk of a sharp slowdown in commodity demand looks negligible in the short term," said Barclays Capital in a report.
U.S. refineries have been hit by more than half a dozen unplanned outages in the past few weeks as plants show the strain of trying to keep up with two years of unexpectedly strong demand growth after a decade of underinvestment.
A fire at the weekend shut a 200,000 barrel per day crude unit at Sunoco Inc.'s (SUN) Philadelphia oil refining complex, a company official said on Monday.
Further storms in what is proving a severe Atlantic hurricane season could knock out more U.S. output, analysts said.
"People dare not price in the surpluses they see," said Deborah White, senior energy analyst at SG Commodities in Paris, of comfortable U.S. crude inventories.
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08/08/2005 12:45
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