LONDON, 11 August 2004 — Oil prices shot above $45 for the first time yesterday, driven by limited exports from Iraq and the ongoing financial crisis at Russian oil giant Yukos, analysts said.
New York’s light, sweet crude for September delivery hit $45.04 per barrel in early deals.
Traders said profit-taking later pushed the contract down 49 cents to $44.35 from Monday’s record-high close of $44.84. Brent North Sea crude oil for September fell 31 cents to $41.25 per barrel in late trading in London, below Monday’s record closing peak of $41.56.
Unrest in Iraq kept the market on boil, said Oppenheimer market analyst Fadel Gheit.
“The situation in Iraq is definitely totally out of control,” Gheit said.
“As long as the Iraqi situation remains volatile, oil prices will remain high,” adding that the market could be looking at prices reaching $50 per barrel within two weeks.
Limited amounts of oil were being loaded yesterday from Iraq’s southern export terminals. At the Basra terminal, exports were down to an average of 35,000 barrels per hour from a previous average of 80,000 barrels, said an official at the terminal on condition of anonymity. One tanker vessel was seen being loaded at the terminal.
Iraq’s southern oilfields have been the only source of exports since an attack on a key pipeline artery halted limited exports from the main northern oilfields last week.
Exports from the southern oilfields around Basra have been running at up to 1.7 million barrels per day but have suffered periodic disruption in recent months, at least some of it the result of sabotage attacks.
On the trading floors, dealers were paying close attention also to developments at Russian oil titan Yukos and in Venezuela ahead of Sunday’s referendum there which the opposition hopes will unseat controversial President Hugo Chavez.
Meanwhile, the US administration said yesterday crude oil prices in New York are likely to top $30 a barrel for the “foreseeable future”. Imported oil would average of $34.00 a barrel in 2005, barely down from $34.31 this year, said a report by the Department of Energy’s research arm.
Higher output by the Organization of Petroleum Exporting Countries (OPEC had failed to ease pressure on prices, it said. “Some reduction in prices is likely if increased production continues to flow and inventories build,” it said.
“However, short of a serious slow down in demand during the coming months, the floor for prices probably remains above 30 dollars for the foreseeable future.”
Oil prices may not be reflecting economic fundamentals of the energy market, it said.
US gasoline prices paid by motorists at the pump had dropped from highs in May of more than $2 a gallon to $1.88 a gallon on Monday, it said.
