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Oil hits record over 44 a barrel Original Source Link: (May no longer be active)
http://www.chron.com/cs/CDA/ssistory.mpl/business/energy/2716567http://www.chron.com/cs/CDA/ssistory.mpl/business/energy/2716567
Aug. 3, 2004, 12:21PM
Oil prices hit record high of $44.24 a barrel
Reuters News Service
LONDON -- U.S. oil prices hit fresh record highs above $44 a barrel today after the head of the OPEC producers' cartel said there was no extra oil around the corner to dampen red-hot markets.
The relentless rise in oil prices has heightened concern about economic growth, with high energy costs pushing U.S. consumer spending to its biggest fall in three years.
U.S. light crude (CLc1) struck $44.24 a barrel, the highest since crude futures were launched on the New York Mercantile Exchange in 1983. It later fell to trade firm around $44.
London's Brent crude (LCOc1) followed suit, scoring $40.52 a barrel, a level not seen since the run-up to the first Gulf War when it hit an all-time high of $40.95.
"It's just up, up and away. There's no stopping it," said Edward Meir, an analyst at Man Energy, adding some brokers believed U.S. oil at $50 a barrel was no longer inconceivable.
Oil prices have surged by more than one-third since the end of 2003 on worries that accelerating global demand has left supplies tightly stretched with little leeway for disruption.
OPEC President Purnomo Yusgiantoro said on Tuesday the cartel had no spare oil to hand.
"The oil price is very high, it's crazy. There is no additional supply," Purnomo told reporters in Jakarta.
"Minister Naimi has said Saudi Arabia can increase production but they cannot do it immediately," he said, referring to Ali al-Naimi, oil minister for Saudi Arabia, the world's number one exporter.
Saudi Arabia has said it would produce 9.5 million barrels per day (bpd) in August, which would be just one million bpd below the country's full capacity.
Purnomo's comments echoed those on Monday of Algerian Oil Minister Chakib Khelil, who said OPEC had done all it could to stop this year's oil price rally.
"OPEC can do nothing," Khelil told reporters in Algiers.
U.S. SPENDING HIT
High energy prices shouldered the blame for Tuesday's drop in U.S. consumer spending. Figures for June showed the biggest plunge since September 2001 as shoppers cut back sharply on car purchases.
U.S. stock markets opened lower, prices for U.S. government bonds got a lift and the dollar slipped after the report.
Oil traders are also nervous that strong demand is preventing global stocks from building ahead of peak winter demand.
The U.S. Energy Information Administration (EIA) will release its weekly oil stocks report on Wednesday, which is expected to show declines in national crude and gasoline inventories although distillate tanks are forecast to rise.
The weekly report is closely monitored as a barometer for demand in the world's biggest oil consumer.
Eight analysts surveyed by Reuters predicted the EIA would show a 300,000 barrel dip in crude stocks in the week to July 30 and a 600,000 barrel fall in gasoline inventories.
Distillate stocks, including key winter heating oil, were seen rising by 1.4 million barrels.
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