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Oil Prices Hit New High,
Topping $46 a Barrel

By MASOOOD FARIVAR
DOW JONES NEWSWIRES
August 13, 2004 5:01 p.m.

NEW YORK -- Crude-oil futures topped $46 a barrel for the first time Friday as a fire at a large BP refinery added to supply fears and robust demand combined to keep energy markets in a feverish state.

At the New York Mercantile Exchange, crude set for September delivery jumped $1.15 to a new all-time high of $46.65 a barrel. The contract eventually gained $1.08 to $46.58, a new settlement high.

At London's International Petroleum Exchange, September Brent crude soared $1.63 to a new high of $43.92 a barrel.

Nymex September gasoline jumped 4.87 cents to end the session at $1.3468 a gallon. Gasoline futures have risen more than 11 cents in the past three days amid renewed supply concerns after falling sharply in July. September heating oil was up 2.35 cents to $1.2145 a gallon. September natural gas rose 9.1 cents to $5.533 per million British thermal units.

The latest supply worry came after an explosion early Friday at BP PLC's giant Whiting, Ind., refinery. The blast knocked out one of four gasoline-making units at the plant, forcing the company to buy gasoline on the open market to meet its customer obligations, traders said.

Built in 1889, the refinery is the third-largest in the U.S. and has a total crude throughput capacity of 410,000 barrels a day. News of trouble at the refinery sent Chicago area gasoline prices soaring.

The outage of a refinery unit usually leads to less demand. But in this case, the Whiting incident was seen as the latest in a string of real or feared supply disruptions around the world.

"Even without the BP fire, this market was poised to move higher because of concerns about international supplies," said Phil Flynn, an analyst at brokerage Alaron Trading Corp. in Chicago.

Paramount among those concerns is the potential loss of Iraqi oil supplies. Iraq exports 1.7 million barrels of oil a day, about 2% of global consumption. Shiite militiamen battling U.S. forces in southern Iraq have threatened to blow up key oil pipelines in the region if the U.S. proceeds with an attack on Najaf.

The U.S. military suspended a planned major offensive on the city as Iraqi government officials sought to negotiate an end to the fighting. But traders were unwilling to leave for the weekend with uncovered positions, Mr. Flynn said.

"It's a wall of worry," he said. "Traders are just too worried about all the factors that could go wrong to hold short positions ahead of the weekend."

Also supporting oil prices is concern that a presidential recall referendum scheduled for Sunday in oil rich Venezuela could destabilize that country, analysts said.

But while Venezuela, Iraq and the Whiting explosion were cited as sources of supply concern, analysts attributed the latest record in oil prices to more general fears of a supply disruption.

"The story is the same," said Kyle Cooper, an analyst with Citigroup Inc. in Houston. "The market again continued to roar higher as fear of supply disruptions remains the major market factor.

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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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