Sun, Sep 09, 2007 - Page 10 News List

Lingering supply jitters push crude oil prices higher


World oil prices rose on Friday on lingering supply jitters as traders girded ahead of an OPEC meeting.

Despite recent price spikes, most analysts do not expect the oil producer's cartel to raise its production quotas when it meets in Vienna, Austria, next Tuesday.

New York's main oil futures contract, light sweet crude for delivery in October, closed up US$0.40 at US$76.70 a barrel.

On Thursday prices in New York had struck US$77.43, not far off the record high of US$78.77 which was hit on Aug. 1.

In London on Friday, the price of Brent North Sea crude for October delivery settled US$0.30 higher at US$75.07 per barrel.

OPEC member Iran indicated on Wednesday it was against any increase in the cartel's production ceiling. At its last regular meeting in March, OPEC members decided to keep their official production quota pegged at 25.8 million barrels of oil per day.

World oil prices had shot up on Tuesday after Qatar's energy minister said OPEC would not move next week to increase the cartel's oil output, despite calls for the organization to respond to tight global supplies and strong energy demand.

Oil traders meanwhile appeared to shrug off news that US employers unexpectedly shed 4,000 jobs last month, marking the first drop in payrolls since August of 2003.

Analysts said oil demand could be dented if US economic growth slows.

"Crude futures remain well supported, with a good potential to the upside. Fundamentally, the market is looking firm and could test its record highs," Sucden analyst Andrey Kryuchenkov said.

"There is simply too much support at this moment, coming from geopolitical and supply concerns. Also, the Atlantic hurricane season is far from over and could have a few more surprises this autumn. The market also looks strong technically, but resistance at all time highs could prove to be strong," Kryuchenkov said.

Prices spiked on Thursday as news of weaker US energy reserves heightened supply concerns.

The US Energy Department said US crude reserves tumbled by 3.9 million barrels in the week ending Aug. 31.

That was far heavier than analysts' consensus forecasts of a drop of 2.2 million barrels.

Elsewhere, the market was tracking the threat to energy facilities from the ongoing Atlantic hurricane season.

The season's hurricanes so far have spared oil installations, although Mexican production has endured interruptions from the storm threats.

"In the coming weeks, if Middle Eastern tensions increase and this coincides with fresh hurricane warnings in the Gulf, it is easy to see Brent crude smashing through the all-time highs," Bank of Ireland analyst Paul Harris said.

Brent's record high stands at US$78.40, which was reached last year.

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