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Oil hits fresh highs as Humberto lashes USAFP/DDP/Martin Oeser
A stock trader watches screens at the Frankfurt Stock Exchange in August 2007.
Europe's main stock markets slid after the euro struck a record dollar high and oil
prices surged above 80 dollars a barrel in New York, threatening company profits.By Michael Adler
AFP
NEW YORK
Petroleumworld.com 09 13 07Crude oil futures touched fresh highs in New York Thursday as a tropical storm rampaged through Texas and Louisiana, posing threats to key US oil-producing areas at a time of heightened supply fears.
New York's main futures contract, light sweet crude for delivery in October, gained 18 cents to a record close at 80.09 dollars a barrel after hitting a new intraday high of 80.20 dollars, two cents higher than Wednesday's record.
In London, the price of Brent North Sea crude for October delivery soared as high as 77.86 dollars per barrel, before pulling back to settle at 77.40 dollars, a drop of 28 cents. Brent's record high stands at 78.40 dollars, set in 2006.
Oil prices began their record-breaking surge on Wednesday after news that US crude reserves dived lower last week, compounding concerns over tight global energy supplies despite OPEC's move to hike output.
Shortly after US floor trading opened, the price of New York crude touched another all-time record following the closure of several US refineries in the path of Hurricane Humberto, traders said.
Humberto was downgraded to a tropical storm, as it pushed into southeastern Texas and Louisiana.
"Certainly in the very short term we do have some hurricane-related volatility in market," said Citigroup analyst Tim Evans.
"There were at least two refineries that lost electrical power and shut down as a result of the storm. That has pushed gasoline prices in particular to the upside today and we did get a new all-time high for (New York) crude along with that."
The closures jangled supply fears in what is already viewed as a very tight market.
The US Department of Energy revealed Wednesday that US crude inventories fell by a sharper-than-expected 7.1 million barrels in the week to Friday, 7 September.
The drop was almost three times heavier than analysts' consensus forecasts.
A decision on Tuesday by the Organization of the Petroleum Exporting Countries to pump an extra 500,000 barrels of oil per day from November would provide little relief to the tight market, analysts said.
"This move by the (OPEC) producer group has failed to calm markets concerned about tight crude supplies, with investors still expecting a potential shortfall in the fourth quarter," said Sucden analyst Michael Davies.
"Many experts are already saying that such an increase in output is unlikely to reverse oil prices."
OPEC's "basket" price of crude oil, based on production in 12 different countries, rose to a record 74.21 dollars a barrel on Wednesday, the cartel announced Thursday.
The record-breaking week for the oil market came despite an announcement by the International Energy Agency that it was lowering its predictions of global crude demand for this year and 2008 because of ongoing turbulence across financial markets.The IEA, which acts as energy policy adviser to industrialized countries, reduced its demand forecast to 85.9 million barrels per day in 2007 and 88 million bpd in 2008, from its prediction last month of 86 and 88.2 million bpd respectively.
Phil Flynn at Alaron Trading said oil traders are betting that the US and global economies will keep growing despite worries about the US real estate slide. He said markets expect a Federal Reserve rate cut will help avert a recession.
" Crude is convinced that a Fed rate cut is in store for next week and that should help keep the demand for oil much stronger than feared," he said.
" The market is also showing that funds are getting an appetite for risk once again.
Funds that fled from record long positions because they feared the housing slowdown perhaps are jumping back in. Even those without subprime exposure fled from risk. Now they are coming back, a strong sign of confidence in our economic future."
AFP 13 1937 GMT 09 07
Copyright© 2007 AFP. All rights reserved.
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