LONDON, 16 August 2005 — Oil prices fell back yesterday from last week’s record run, but briefly touched a fresh high in London, in a market shaken by gasoline supply fears and US refinery outages.
New York’s main contract, light, sweet crude for delivery in September, lost 21 cents to $66.65 per barrel in early trade. It reached $67.10 on Friday - the highest point since it was first traded in 1983.
In London, the price of Brent North Sea crude oil for delivery in September shed 17 cents to $66.28 per barrel yesterday after earlier striking $66.85, also a new high. The September contract was due to expire today.
New York futures have rocketed by more than 60 percent since August 2004, and more than doubled since August 2003, when they stood at just $30 a barrel. But, adjusted for inflation, they remain below levels reached in 1979 when prices surged to upward of $80 a barrel in today’s money.
“We would not be surprised to see a test of the $70-per-barrel level for the New York contract before too long,” said Barclays Capital analyst Kevin Norrish.
“Prices gained support from near-term supply news, with a spate of refinery shutdowns in the US and geopolitical tensions.”
Dealers said the underlying tone remained bullish while the high cost of energy was not impinging US economic growth.
“Worries persist over tight US gasoline (petrol) supplies and indications that high prices have so far not had an effect on US economic growth,” Sucden analyst Sam Tilley said. “The market is now targeting the $70-per-barrel level, a level not previous thought likely a couple of weeks ago.”
During the last four weeks, gasoline demand was 1.4 percent higher than for the same period in 2004, while gasoline reserves stood 2.0 percent lower.
That was largely thanks to the traditional driving season in the United States - when many Americans take to their cars for the summer holidays - which runs until September.
Elsewhere, Iraq stepped up oil production from its southern oil fields by 300,000 barrels per day to 2.3 million bpd, a spokesman for the state-owned South Oil Company said. Southern Iraqi oil production was previously 2.0 million bpd, of which 1.5 million barrels were exported and the rest used for domestic consumption.