LONDON, 7 August 2004 — World oil prices retreated from record highs yesterday, easing below $44 in New York as a Russian court threw a new lifeline to troubled oil giant Yukos.
In New York the price of light sweet crude for delivery in September fell 45 cents to $43.96 a barrel, just hours after setting a new record of $44.77 per barrel in electronic deals.
In London, Brent North Sea crude oil for September delivery dropped 42 cents to $40.70 a barrel in late trading, having earlier reached a new all-time peak of $41.50 per barrel in electronic deals.
Prices were also lifted by news of a fire late Thursday at a BP gasoline refinery in Houston, Texas, but BP said yesterday the refinery unit itself was undamaged by the fire and had resumed operations.
“I think the market briefly went higher when that news first came out but then when it was known that production was a near capacity we sort of slipped back off again,” said Machacek.
Analysts said that New York’s West Texas Intermediate (WTI) light sweet crude could test $45 a barrel within days and could even breach $50 during the US and European winter.
“We’re expecting prices to come off in the third quarter, but there remains a possibility that this winter, if we have a supply loss or if simply demand doesn’t slow down, then at some times you could see WTI test 50 (dollars),” said Societe Generale economist Deborah White.
“We’re in uncharted territory. No one knows. But if the market reacts this way to a relatively small supply loss then think what happens if we had major problems in Iraq or if Yukos were out for even weeks.”
Yukos will be forced by the end of next week to shut down rail shipments that account for a quarter of its export trade if its bank accounts remain frozen.
Traders largely shrugged at OPEC’s latest reassurances that it was on standby to increase oil supplies by up to 1.5 million barrels per day (bpd) to help to cool prices.
“We are ready to increase production between 1.0-1.5 million bpd and this issue will be discussed in the Sept. 14 meeting in Vienna,” OPEC President Purnomo Yusgiantoro told reporters in Jakarta.
