'); //--> E-Mail | Comments | E-Mail Newsletters | RSS
AFX News Limited
Oil prices surge to new record highs on supply worries ahead of winter UPDATE
(Updates prices, adds details) LONDON (Thomson Financial) - Oil prices surged to new record highs on ongoing worries over tightening supplies ahead of the northern hemisphere winter and escalating Middle East tensions. The US yesterday announced it is imposing new sanctions on Iran, including designating the Quds Force of the international arm of the Revolutionary Guards a supporter of terrorism. The move has renewed worries that Iran, the world's fourth largest crude producer, could eventually retaliate to sanctions by withholding oil sales to the West. Iran aside, tensions between Turkey and the Kurdish separatist rebels in northern Iraq are continuing, with Turkish forces saying they recently repelled a guerrilla attack near the Iraqi border. Iraq holds the world's third largest reserves of oil. Market participants are worried any possible supply disruptions in the region, either in Iraq or Iran, could worsen the already tightening supply side situation this winter. Weekly US government data released on Wednesday showed a huge 5.3 mln barrel decline in the country's crude inventories, sparking the current rally to new record highs. Analysts were expecting crude stocks to rise by around 1 mln barrels. 'The market has advanced on continuing fears that the winter will see greater tightness in the market, a fear heightened by Wednesday's shocking EIA numbers,' said Bank of Ireland (nyse: IRE - news - people ) analyst Paul Harris (nyse: HRS - news - people ). He added that the current disruption to Mexican oil exports on account of bad weather is prompting concerns next week's data will show even more inventory declines. At 11.01 am, London's benchmark Brent crude contracts for December delivery were up 24 cents at 87.76 usd per barrel, having earlier hit an all-time record of 89.30 usd. Meanwhile, New York crude contracts for December delivery rose 47 cents to 90.87 usd per barrel, having earlier surged to 92.22 usd, their highest ever level. Oil prices have risen some 6 usd since the release Wednesday of US inventory data. Before that, prices had been declining for four days running on concerns over slowing US economic growth. While those concerns remain in the background, they have been somewhat overshadowed by speculation the US Federal Reserve will cut interest rates next week in a bid to prop up the ailing US economy. The rate cut speculation has also served to weaken the dollar further. The currency hit a new record low against the euro earlier today, making dollar-denominated oil cheaper for holders of other currencies. 'Growing belief that the Fed will cut rates next week, precipitating fresh dollar lows, will see oil well supported and testing new highs next week,' said Bank of Ireland's Harris. Meanwhile, the dollar weakness has prompted OPEC officials such as secretary general Abdullah al-Badri to state that high oil prices are not a result of too little supply. The comments have sparked worries that the cartel, supplier of more than a third of the world's crude oil, will not agree to raise output further at its summit in Saudi Arabia next month. The cartel agreed last month to raise output by 500,000 bpd from Nov 1, and recent data from tanker tracking agencies shows it has already implemented these output hikes. Nevertheless oil prices continue to surge higher, with analysts saying even if the cartel agrees to raise production again in November, prices could continue rising. OPEC only has about 2 mln bpd of spare capacity, meaning were it to raise output again by, say, 500,000 bpd, it would be less and less able to soothe the market in the case of an unexpected supply disruption. maytaal.angel@thomson.com ma/slm//cmr COPYRIGHT Copyright Thomson Financial News Limited 2007. All rights reserved. The copying, republication or redistribution of Thomson Financial News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Financial News. Neither the Subscriber nor AFX News warrants the completeness or accuracy of the Service or the suitability of the Service as a trading aid and neither accepts any liability for losses howsoever incurred. The content on this site, including news, quotes, data and other information, is provided by AFX News and its third party content providers for your personal information only, and neither AFX News nor its third party content providers shall be liable for any errors, inaccuracies or delays in content, or for any actions taken in reliance thereon.
More On This Topic Companies: IRE | HRS
Article Controls
E-Mail | Comments | E-Mail Newsletters
del.icio.us | Digg It! | My Yahoo! | Share | RSS
Related Sections Home > News & Analysis
'); //--> News Headlines | More From Forbes.com | Special Reports Subscriptions >
Oil has risen to a new all-time record high during trading in Asia, passing US$91.10 at 10:23 p.m. on October 25 (eastern time).

In electronic trading at the NYMEX Crude Futures in the United States touched a record price of, at US$92.22, according to ''Bloomberg'', setting another record all-time high. On the IntercontinentalExchange Brent Crude futures reached US$89.30 (basis December) as of 8:34 a.m..

NYMEX Crude closed at $91.86, while ICE Brent closed at $88.69, at the conclusion of Friday's trading.

The raise come when the United States announced that it had an "unexpected loss" in the nation's stockpile of oil. The fear that Turkey may launch a large scale attack on Kurdish Militants inside Iraq is also being blamed for the raise in prices and the U.S. imposed more sanctions on Iran for continuing to enrich uranium.

Australia's Commonwealth Banks states that the raise is "being supported by an increase in geopolitical tensions and also market developments. The US has announced that it is imposing new sanctions on Iran, Oil markets also continued to have an eye on developments related to the current tensions between Turkey and Kurd rebels in Iraq."

OPEC has agreed that by November 1, 2007, they will increase the amount of barrels of oil they produce by 500,000 barrels a day. The U.S. says that they would like that number increased.