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Oil climbs near 42 a barrel Original Source Link: (May no longer be active)
http://www.reuters.com/newsArticle.jhtml?type=businessNews&storyID=5709014http://www.reuters.com/newsArticle.jhtml?type=businessNews&storyID=5709014
Oil Climbs Near $42, Supply Fears Linger
Mon Jul 19, 2004 03:47 PM ET
NEW YORK (Reuters) - Oil prices climbed near $42 a barrel on Monday as new sabotage attacks in Iraq helped rekindle worries over the reliability of Middle East crude shipments.
U.S. light crude settled up 39 cents at $41.64 a barrel, after hitting a high of $41.90, adding to last week's rally and approaching the all-time futures contract high of $42.45 struck in June. Brent crude , traded in London, eased 10 cents to $37.90 a barrel.
"Oil prices are still strong because demand is strong, capacity utilization is high, and we've still got concerns over security of supply," said Commerzbank analyst Steve Turner.
A suicide bomber in Iraq blew up a fuel truck near a Baghdad police station on Monday, killing at least nine people, wounding 62 and destroying cars and buildings. It was the latest in a series of attacks that have also targeted the oil-rich nation's energy infrastructure and hindered oil shipments.
With world spare capacity at its lowest level in more than a decade, worries over supply disruptions have kept prices well over $35 a barrel for most of the year.
In its first forecasts for next year, the Organization of the Petroleum Exporting Countries said on Monday it expected slower but still firm growth in the world's appetite for oil.
The oil cartel said demand for its crude would rise by 340,000 barrels per day next year to an average 27.36 million bpd, after an increase of 590,000 bpd this year.
World oil demand would also grow 2 percent to 82.56 million bpd in 2005, after this year's unusually sharp growth of 2.7 percent, OPEC said.
Commerzbank's Turner said OPEC's confirmation last week that it would lift official output levels from Aug. 1 by 500,000 bpd would have little effect.
"Most OPEC members that are not constrained by capacity are already over-producing their Aug. 1 quotas, so this will have very little impact on physical supply," Turner said.
OPEC, which controls 50 percent of global crude exports, is thought to be pumping at its highest levels since December 1979.
Consulting firm Petrologistics estimated OPEC output, excluding Iraq, at 27.81 million bpd in July, almost 2 million bpd above the new August ceiling of 26 million bpd.
Iraqi exports from the south were running at just under 1.7 million bpd, shipping sources said on Monday, down from nearly 2 million bpd before last year's war.
Analysts said a drop in the dollar was also encouraging speculators to switch into oil from relatively low-yielding fixed income and foreign exchange markets.
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