- The Washington Times - Tuesday, August 3, 2004

NEW YORK (AP) — Oil prices climbed to new highs around the globe yesterday, rising above $44 a barrel in the United States, as global supply concerns and terrorism fears made for jittery trading at a time of strong demand.

Light crude for September delivery rose 33 cents to $44.15 on the New York Mercantile Exchange, topping the previous record, set Monday, of $43.82.

On London’s International Petroleum Exchange, September Brent crude futures hit a fresh 14-year high of $40.64, up 67 cents from Monday’s settlement.

Traders are investing largely on psychological factors, analysts said.

“We’ve got a market that’s reacting ahead of time, it seems, to every single bullish scenario,” said Peter Beutel, president of energy consulting firm Cameron Hanover Inc. in New Canaan, Conn.

Mr. Beutel added that oil and refined products futures are climbing in spite of increasing output levels, jumps in refinery use and other factors that typically drive prices lower. “Though supplies continue to increase, there’s a sense that there’s a tighter market … than it really is.”

Early yesterday, the president of the Organization of Petroleum Exporting Countries warned the cartel could not immediately increase output to help bring down prices.

Purnomo Yusgiantoro, who is also Indonesia’s oil minister, said yesterday that Saudi Arabia, the world’s largest oil exporter, had spare capacity, but could not bring more crude oil to the market in the short term.

But Dow Jones Newswires quoted a senior Saudi source as saying Saudi Arabia had the capacity to “immediately” increase its oil output from 9.5 million barrels a day to 10.5 million barrels a day.

Futures were also pressured yesterday by fears of terrorist attacks in the United States. U.S. authorities on Sunday warned that al Qaeda was planning attacks on five key financial institutions in New York, New Jersey and Washington.

There also was uncertainty over the fate of troubled Russian oil giant Yukos, which produces 2 percent of the world’s oil. Russian tax authorities said Monday they would begin an investigation into the activities of Yukos, Russia’s largest oil producer, for 2002.

Yukos already is struggling with a demand for $3.4 billion in back taxes for 2000. Market observers said Monday’s move could mean Yukos also would be saddled with tax claims for 2002. Yesterday, a senior Russian tax official made remarks that suggested Yukos could face a bigger bill than initially announced.

Attacks on Iraqi oil infrastructure also have kept oil traders on their toes, said John Kilduff, senior vice president of the energy risk management group at Fimat USA Inc. Yesterday, saboteurs bombed a northern pipeline that sends oil to a local refinery as well as to Turkey for export, oil officials said.

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