Crude oil hits new Asian high

Crude reached a new high in Asian trade yesterday, hitting US$52.38 per barrel amid reports of a possible strike in Nigeria and the sluggish revival of output in key Gulf of Mexico oil fields following hurricane damage.

After settling at a record US$52.02 per barrel on Wednesday in New York, crude for November delivery on the New York Mercantile Exchange reached its new high in Asian trade. In London, November Brent opened in electronic trade at US$48.10 per barrel, up US$0.11 from its overnight settlement.

The US Energy Department said on Wednesday that oil demand was growing and consumption in economies like China will not ease, while producers are pumping close to capacity.

Markets to roil over longer-than-expected production snags in the Gulf of Mexico, where production is 478,000 barrels per day below normal and oil output is down by more than 16 million barrels since Sept. 13.

The US Minerals Management Service said Hurricane Ivan damaged oil and natural gas pipelines in the Gulf of Mexico, causing oil and gas to leak out at numerous points along the pipeline network. Authorities are still unsure how many oil spills have been caused by storm-cracked pipelines.

In one spill at a Shell Oil Co pipeline about 50km east of Venice, Louisiana, near the mouth of the Mississippi River, crews had gathered about 380,000 liters of water polluted with oil.

"Nigeria, Iraq, hurricanes -- they are not the cause [of the price spike], they are contributing factors. The cause is demand, and refining capacity has failed to meet demand," said Esa Ramasamy of Platts, an energy reporting firm in Singapore.

Ramasamy that with no clear picture on actual stockpiles in many key oil-consuming countries, there is increasing speculation on pricing, especially with the Northern Hemisphere winter approaching.

US officials warned on Wednesday that US homeowners should expect their heating bills to rise this winter due to double-digit price increases for heating oil and natural gas.

"People are concerned about inventory and heating and the pace of recovery in the Gulf of Mexico," said Mitsui Bussan Futures chief commodities strategist Tetsu Emori in Tokyo. "The price of heating oil is already expensive. Any dips, I'd say buy right away."

While prices are 64 percent higher than a year ago, when adjusted for inflation, they remain about US$28 below the peak reached in 1981.

Heating is priced more than 70 percent above year-ago levels.

Meanwhile, Nigeria's main oil workers' union said it would join a national strike set to begin next week unless the government agreed to talks on rising fuel prices.

Nigeria, which produces more than 2 million barrels of crude daily, is the world's seventh-largest oil exporter and fifth-largest source of crude for the US, the world's top petroleum products consumer.

A major worry among analysts is the world's limited excess oil-production capacity, or supply buffer, which is hovering at only around 1 percent above robust global consumption of 82 million barrels per day. As a result, fears of supply disruptions in Russia, Venezuela and Nigeria have pushed prices higher for several months.

Also on Wednesday, the Energy Department reported that commercially available inventories of crude grew by 1.1 million barrels to 274 million barrels. That follows an increase of 3.4 million barrels the week before, but leaves inventories 4 percent below year-ago levels.