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Oil prices higher after new BP cut
AFP
NEW YORK
Petroleumworld.com 08 25 06
Oil prices rebounded Thursday on news that BP had further cut output at the biggest US oil field, as traders tracked the latest tropical storm in the Atlantic.
New York's main contract, light sweet crude for delivery in October, added 60 cents to close at 72.36 dollars a barrel.
In London, Brent North Sea crude for October delivery was up 66 cents at 72.68 dollars a barrel.
Crude futures had slumped on Wednesday on news of a surprise increase in US gasoline inventories in the past week, which came despite strong demand from summer vacationers enjoying motoring holidays.
But the potential for damage to Gulf of Mexico oil installations from Tropical Storm Debby revived the interest of speculative buyers, Alaron Trading analyst Phil Flynn said.
"It might not even come close to the Gulf of Mexico, it's too early to say. But it could really disrupt the natural gas market," he said.
Debby has been upgraded from a tropical depression, but was still far off in the mid-Atlantic having passed the Cape Verde islands earlier Thursday.
"The Prudhoe Bay problem is also supportive to the market," Flynn said.
British energy giant BP said that output at its troubled oil field in Alaska had fallen to about a quarter of the normal level because of a new technical problem.
A company spokesman told AFP in London that output had been cut by an extra 90,000 barrels per day at the vast field, bringing production down to about 110,000 bpd.
Prudhoe Bay, the biggest oil field in the United States, was already operating at about half its normal output of 400,000 bpd owing to a pipeline leak revealed earlier this month.
Concern that US oil production would be slashed had sent the price of London Brent crude oil to a record 78.64 dollars per barrel on August 7.
Prices have fallen heavily since, mainly owing to a calmer Middle East.
But going forward, prices are seen holding above 70 dollars with traders still concerned over Iran, the world's fourth-biggest producer of oil.
World powers reacted coolly Wednesday to Iran's response in a nuclear standoff, saying it fell short of UN demands.
In line with a UN Security Council resolution, the United States and its European allies insist that Iran must stop enriching uranium by August 31 or face the threat of sanctions.
Analysts argue that Iran's vital oil supplies could be affected if sanctions are imposed on the Islamic republic. Iran pumps about 4.0 million barrels of oil per day, of which around 2.7 million are exported.
"But it is doubtful how much reaction there will be in the energy complex as there is justifiable doubt that the Security Council will take swift action," Fimat analyst Mike Fitzpatrick said.
He said that sanctions "might eventually lead Iran to disrupt oil supplies, but initial sanctions will probably be more symbolic than anything else".
The Organization of the Petroleum Exporting Countries said meanwhile that it has no plans to cut production or return to a quota system, at least for the rest of the year, the News Agency of Nigeria reported.
"Unless something extraordinary happens, I do not see a return to quota system or a cut in production soon," the agency quoted Nigeria's oil minister and current OPEC president Edmund Daukoru as saying.
AFP 24 2002 GMT 08 06
Copyright ©2006 AFP. All Rights Reserved.
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