LONDON, 2 August 2007 — The price of New York oil soared to a record high of $78.77 a barrel yesterday, as plunging US crude inventories stoke fears about stretched energy supplies around the world, traders said.
New York’s main futures contract, light sweet crude for delivery in September, leapt to the all-time high after the US Department of Energy said that US crude stocks sank by 6.5 million barrels in the week ended July 27.
That was far heavier than market expectations for a drop of 1.13 million barrels.
“The US statistics that came out today surprised a lot of people in terms of the extent of the draw (drop),” said BNP Paribas analyst Harry Tchilinguirian.
“It surpassed people’s expectations,” he added.
The news had a big impact on the global oil market because the United States is the world’s biggest consumer of energy, analysts said.
Fueled by fierce global demand and tight supplies, oil prices in London and New York have rocketed over the past two months by $12 to reach dizzy heights above $78 a barrel.
Yesterday’s new US record smashed the previous all-time high of $78.40 that was set on July 13, 2006.
It also beat London Brent’s historic high point of $78.64 per barrel, which was set on Aug. 7, 2006, after a pipeline spill forced British firm BP to close output from Prudhoe Bay, the biggest oil field in the United States.
According to Tchilinguirian, oil prices could head even higher if global supplies face new disruption.
“Any further (price) increase could be from some sort of escalating geopolitical tension or supply disruption centered around key producers, like the situation last year when we had the crisis in Lebanon.”
American crude stocks, which remain at relatively high levels overall, have been declining for some weeks at Cushing, Oklahoma — the delivery point for the New York contract.
