U.S. light crude hits new high in electronic trading; London's Brent tops $50 for first time.
October 11, 2004: 7:30 AM EDT
LONDON (Reuters) - Oil prices hit fresh records Monday, pushing London Brent crude above $50 for the first time and extending a relentless rise that has added around 65 percent to the cost of crude this year.
Brent crude hit $50.18 on London's International Petroleum Exchange, up 47 cents, while U.S. light crude for November delivery hit a new trading high of $53.63 and later stood at $53.51, up 20 cents in electronic trading.
China has led rapid growth in world oil demand this year, eroding spare production capacity in OPEC nations and leaving the global market just a small cushion to cope with disruptions.
Saudi Oil Minister Ali al-Naimi said current price levels were unjustified and should come down after November's U.S. presidential elections.
"There is no justification for it (oil price) to be where it is. This is a political year and this may have some influence,'' he said.
Naimi reiterated that Saudi Arabia, the world's biggest exporter, could pump an extra 1.5 million barrels per day if required. Oil traders say that extra supplies of the kingdom's high-sulfur crude can do little to help.
Industrialized nations lack high-tech refinery capacity to process OPEC's low-quality crude into transportation and heating fuels. This has forced refiners to bid up prices for higher quality supply from Africa and the North Sea.
"As winter approaches, fears of insufficient supplies to meet heating demand are driving a strong push for sweet, distillate-rich crudes in the hope of building a sufficient stock cushion,'' said PFC Energy in a report.
The lingering impact of Hurricane Ivan, which hit offshore U.S. oil producers nearly four weeks ago has further tightened supply. About 475,000 barrels per day (bpd) of U.S. Gulf of Mexico oil production remains out of commission.
A third of that is expected to be resumed by the end of this month, the U.S. Minerals Management Service said Friday. But operators say some output may be out until next year.
Nigeria also remained a worry after repeated threats to its production. Unions began a four-day general strike over fuel prices on Monday, although oil executives said there should not be an immediate impact on output, which accounts for about three percent of the world's oil.
Oil importers are growing increasingly edgy about the impact on their economies.
"(Oil) is creating headwinds for the otherwise very strong economy,'' U.S. Treasury Secretary John Snow said over the weekend.
High oil prices will cut economic growth in South Korea, the world's fourth-biggest oil buyer, by 0.4 percentage points next year, Finance Minister Lee Hun-jai said on Monday.
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