Oil scales new peak
By Janet McBride
http://today.reuters.com/news/NewsArticle.aspx?type=businessNews&storyID=uri:2005-08-08T104958Z_01_L08675543_RTRIDST_0_BUSINESS-MARKETS-OIL-DC.XML&pageNumber=1&summit=
LONDON (Reuters) - Oil hit a record high of nearly $63 a barrel on Monday
propelled by worries that the United States may face a gasoline shortage
and Middle East tensions.
Iran was pressing ahead with plans to restart nuclear work, risking a
confrontation with the European Union which has warned OPEC's second
biggest producer of possible U.N. sanctions.
The United States said its diplomatic missions in OPEC heavyweight Saudi
Arabia would close on Monday and Tuesday because of a threat against U.S.
buildings there.
U.S. light sweet crude was up 46 cents at $62.77 a barrel at 1031 GMT
having leapt as high as $62.90, past Wednesday's peak. London Brent crude
was up 51 cents at $61.58 a barrel having touched $61.76.
"Crude might have gone too far too quickly, but I don't see us pulling back
straight away," a London trader said.
Prices charged higher as a steep drop in U.S. gasoline stocks and nearly
daily refinery problems raised doubts about fuel supplies in the world's
biggest consumer.
Although there is only about one month left in the traditional summer
demand period, dealers said a late price rally could not be ruled out.
A severe hurricane season could knock out further U.S. supply. "People dare
not price in the surpluses they see," said Deborah White, senior energy
analyst at SG Commodities in Paris.
U.S. refineries have been hit by more than half a dozen unplanned outages
in the past few weeks as plants show the strain of trying to keep up with
two years of unexpectedly strong demand growth after a decade of
underinvestment.
Adding to an already long list of refinery trip-ups, ConocoPhillips and
U.S. refiner Valero Energy Corp. shut units late last week.
Unexpectedly strong U.S. jobs growth data for July on Friday reinforced the
perception that soaring oil prices had yet to seriously erode the global
economy.
"The (global) economy is tolerant to these high oil prices," said Naohiro
Niimura, vice president at the derivatives division of Mizuho Corporate Bank.
MIDDLE EAST CONCERNS
New uncertainties in top Middle East producers have added to the concerns.
The U.S. embassy's decision to close missions in Saudi Arabia on Monday and
Tuesday worried traders, who fear militants could target the kingdom's oil
facilities.
"It will have an effect on the market," one trader said.
In Iran, conservative president Mahmoud Ahmadinejad was sworn in at the
weekend, just as Tehran rejected an EU package of incentives meant to
prevent it restarting a nuclear program that Western countries fear is
meant to develop atomic weapons.
Conservative media reported that Ahmadinejad would appoint industry
outsider Ali Saeedlou as oil minister, raising more concerns about foreign
investment policy that some fear could stymie production growth in the
coming years.
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