WSJ - Oil Prices Hit New High, Topping $46 a Barrel

PARAGON · #4 08-13-2004, 10:26 PM

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Copyright (c) 2004 The Daily Star</TD></TR>
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<TD class=red>Saturday, August 14, 2004</TD></TR>
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<TD class=manchettebig>Oil prices back off from record peak on Friday</TD></TR>
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<TD class=manchettesmall vAlign=center height=20>Iraq, Venezuela and Russia
factor in</TD></TR>
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<TD class=blue3>By Agence France Presse (AFP)

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LONDON: World oil prices traded close to
record closing peaks Friday on supply worries, amid heavy fighting in Iraq and
ahead of a weekend referendum in major producer Venezuela on the rule of
President Hugo Chavez, traders said.
Brent North Sea crude oil for September eased
four cents to $42.25 in early afternoon trading in London after closing at a
record peak of $42.29 the day before.
The Brent price had reached also an intra-day
record high level of $42.56 dollars Thursday.
New York's light sweet crude for delivery in
September was unchanged at $45.50 dollars, the record settlement price reached
Thursday.
New York's main crude oil contract had spiked
at an all-time intra-day high of $45.75 Thursday. "There is a bit of correction
to last night's stronger move but I still believe that the underlying strength
is still there," GNI-Man Financial trader Keith Pascall said.
"You have still got supply concerns in Iraq
and Venezuela and the Yukos problem does not go away," he said, adding that
there were "major concerns" about all-out strike action in the South American
country.
The market is worried that Sunday's
referendum on the rule of President Hugo Chavez could lead to a crippling strike
and a reduction of oil exports.
Venezuela, the fifth-largest crude exporter,
produces between 2.5 and 2.6 million barrels per day, according to analysts, and
about 15 percent of the oil imported by the United States.
A lengthy Venezuelan general strike in late
2002 and early 2003 shut down the country's oil industry.
The latest polls suggest that the
left-leaning Chavez will serve out the remaining two years of his term in
office.
Helping also to support prices Friday was
news of fierce fighting in Iraq, where thousands of US forces have launched a
massive assault on the Iraqi holy city of Najaf aimed at crushing a Shiite
Muslim uprising.
Shiite militia leader Moqtada Sadr was
reported wounded Friday, as US and Iraqi forces closed in on his Najaf
stronghold.Sadr's uprising has meanwhile forced the closure of a southern oil
pipeline, halving Iraq's crude exports.
In further unrest, a British journalist was
abducted at gunpoint from the southern Iraqi city of Basra, the Foreign Office
in London confirmed.
There appeared to be better news for
embattled Russian oil titan Yukos, however.A Western bank has been asked to
mediate in the Yukos oil saga in a sign many in Russia see as a Kremlin decision
not to renationalize Russia's oil.
It came after top US officials piled pressure
on President Vladimir Putin's administration to come clean about what it planned
to do with Yukos amid fears of disruption in oil exports from the world's number
two producing nation. China - whose energy-starved northern regions rely heavily
on Yukos - has done the same, according a Wall Street Journal report.
Yukos produces about 1.7 million barrels of
oil per day - nearly as much as the current maximum output of Iraq.
The year-long conflict surrounding Russia's
number one producer is now focused on its Siberian crown jewel Yugansk.
It pumps 60 percent of Yukos's oil and has
been confiscated by the state to pay off a $3.4 billion tax bill that could grow
to $10 billion in the coming weeks.</TD></TR>
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