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Bin Laden threat drives oil to four-month high

Oil prices surged past US$67 a barrel in Asian trading yesterday after al-Qaeda leader Osama bin Laden threatened new attacks against the US, dealers said.

Bin Laden's latest threat, which was made in an audiotape broadcast over al-Jazeera television, further fuelled market tensions triggered by potential supply disruptions in major oil producers Iran and Nigeria, they said.

At 7:15am GMT, New York's main contract, light sweet crude for delivery in February, was up US$0.27 at US$67.10 a barrel, the highest in four months, from its close of US$66.83 in the US on Thursday.

"The bin Laden tape has caused a knee-jerk reaction on the part of the market," said Victor Shum, a Singapore-based analyst with the US energy consultancy Purvin and Gertz.

He said speculation by oil traders could push prices to US$70 a barrel, which would be just below the all-time high of US$70.85 on Aug. 30 last year after Hurricane Katrina hammered US oil production facilities in the Gulf of Mexico region.

"There is certainly the possibility [of oil prices hitting US$70]. The recent events have attracted speculators and oil has become a lot like an investment," Shum said.

Meanwhile, the geo-political fallout from Iran's decision to resume sensitive nuclear activities and unrest in Nigeria, Africa's biggest oil producer, remained key ingredients to the market's volatility.

"Geo-politics is behind the surge in oil pricing... The Nigerian unrest has caused a disruption in supply," Shum said.

Anglo-Dutch energy giant Shell, Nigeria's biggest producer and so far the main target of the attacks by separatist militants, has been forced to cut output by 226,000 barrels per day since the crisis began over a week ago.

Iran, the second-biggest crude oil producer in the OPEC cartel, has warned Western powers that sanctions over its controversial nuclear program could provoke a world oil crisis.

The geo-political situation overshadowed the US Department of Energy's report on Wednesday that US energy stockpiles rose across the board in the week ended Jan. 13, news that would normally depress oil prices.

Crude stocks rose 2.7 million barrels over the week to total 321.4 million barrels, it said.

Supplies of distillate products, used to make heating fuel and diesel, rose 900,000 barrels to 134.7 million. Reserves of gasoline, or petrol, were up 2.8 million barrels at 211.6 million.
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