Oil prices hit fresh records on Friday, climbing close to $45 after a fire at a big U.S. refinery underlined the vulnerability of supplies at a time when global demand is accelerating at the fastest pace in more than 20 years. U.S. light crude struck $44.73 a barrel, 32 cents up from Tuesday's settlement and the highest in the 21-year history of crude futures on the New York Mercantile Exchange. London's Brent crude tipped $41.35 a barrel, a record for the contract since it started trading in 1988 on the International Petroleum Exchange. The latest in a string of rallies this week came after a fire shut a gasoline-producing unit at BP Plc's 470,000 barrel-per-day (bpd) refinery in Texas, the third-biggest plant in the United States. The flash fire was quickly extinguished.
"Oil is certainly volatile and all the supply side issues at the moment are making it extremely difficult to get a good handle on the market," said David Hynes, industry analyst at ANZ Bank in Melbourne. "While this uncertainty remains, prices will stay at these levels but they're well above fundamentals and should be about $35 based on levels of stocks and the demand growth outlook for the next 12 months." Prices bounded higher on Thursday after the Russian government barred oil major YUKOS from access to its bank accounts, threatening its ability to continue exports. YUKOS, which pumps 1.7 million bpd, or 2 percent of world supplies, is battling bankruptcy from a multi-billion dollar tax debt, threatening its ability to continue exports. Oil has rallied more than 30 percent this year on worries that soaring demand, especially in the United States and China, has tightly stretched supplies, leaving little leeway for any disruption in the supply chain. Fears of inadequate supply have been deepened by security concerns in Saudi Arabia and Iraq as well as uncertainty in Venezuela and Nigeria -- all OPEC members.
OPEC OUTPUT HITS 25-YEAR HIGH
The Organisation of the Petroleum Exporting Countries, which controls half of the world's crude exports, is pumping at the highest levels since 1979 as it tries to stem oil's relentless rise. OPEC President Purnomo Yusgiantoro said on Friday that output was running at 30 million barrels daily and the group was ready to lift production by 1-1.5 million bpd if it was decided necessary when ministers meet in September. "Right now OPEC's official quota is 26 million barrels per day (bpd), including Iraq it is 28 million bpd," Purnomo, who is also oil minister for Indonesia, told reporters. "But right now there is an overproduction of about 2 mln bpd, so total OPEC production is 30 million bpd. That is partly because OPEC wants to stabilise the oil market," he said. OPEC ministers are scheduled to meet in Vienna on September 15 to review output policy, but only Saudi Arabia, the world's top exporter, has any significant spare capacity to increase supply. "We are meeting in September and we are ready to increase production if it is necessary with immediate additional production between 1 million and 1.5 million bpd," Purnomo said. OPEC lifted its official output limits by 500,000 bpd to 26 million bpd on Aug. 1. The limits exclude Iraq, which is struggling to rebulid its oil industry after the 2003 war and a spate of sabotage attacks on key pipelines earlier this year. Iraqi exports ran at about 1.5 million bpd in July and are expected to rise to between 1.7 and 1.8 million bpd this month.///