World oil prices climbed on Monday as energy companies operating in the Gulf of Mexico braced for possible widespread output disruptions from a powerful hurricane and Iraq saw some of the bloodiest violence in weeks. U.S. light crude rose 82 cents to $43.63 a barrel and London's Brent crude jumped 84 cents to $41.04 a barrel. Oil prices have swung widely in recent days and are almost $6 below the all-time peak at $49.40 struck on Aug. 20 for U.S. crude as dealers remain nervous over potential supply hiccups as producers pump almost at full tilt. "Prices are being pulled from pillar to post at the moment, which is all a consequence of a tight market and will continue as long as demand is so strong and supply is struggling to keep up," said Daniel Hynes, industry analyst at ANZ Bank in Sydney.
"I can't see the volatility easing any time soon as long as the supply/demand outlook remains tight." A 4 percent rally in oil prices last Thursday was triggered by data showing that U.S. crude stocks had fallen more than 6 percent in the past two months to the lowest level since March. The thin inventory cushion will heighten concerns over Hurricane Ivan, which is forecast to enter the Gulf of Mexico on Monday. The gulf is home to about a quarter of U.S. oil and gas output. Shell Oil Co. said on Sunday it had shut offshore production wells in the eastern Gulf of Mexico and was evacuating workers from the eastern and central gulf ahead of the hurricane's approach. It was not immediately clear how much output was affected by Shell's closure. Other oil companies have evacuated non-essential workers in the area, but no other output appeared to be affected so far. Dealers were also concerned that the upsurge in violence in Iraq over the weekend might impact the country's oil exports, which have suffered a series of disruptions this year due to sabotage on pipelines. At least 110 people were killed in clashes across the country on Sunday in one of the bloodiest days for weeks. On Friday, oil officials said Iraqi exports were runing normally at about 1.8 million barrels per day (bpd) from southern export terminals and at a reduced 200,000 bpd from the northern Kirkuk oilfields through the Turkish Mediterranean port, Ceyhan. "Uncertainties in Iraq will prompt traders to buy," said Shun Maruyama, an energy analyst at UFJ Institute Ltd. in Tokyo.
OPEC FRETS ON STOCKBUILDING
The Organisation of the Petroleum Exporting Countries will review policy on Wednesday and signs were emerging that the cartel might resist calls to raise official output limits to legitimise actual production. OPEC, which controls more than half of global crude exports, is pumping about 1.5 million bpd above its existing ceiling of 26 million bpd. OPEC delegates said on Sunday concerns were growing among the cartel's 11 members that group production at a 25-year high could lead to a hefty stockbuild in the fourth quarter, when inventories are normally drawn down. "I think there will be strong resistance to the idea of raising quotas to match current output," a senior OPEC delegate said. "There is a heavy programme of refinery maintenance coming up and that means a big crude stockbuild. Prices are high for many reasons but it is not for a lack of supply." Any OPEC agreement is unlikely to have any immediate impact on supply levels because all in OPEC, bar Saudi Arabia, are pumping at full capacity. But a decision to raise quotas by less than a million barrels daily, or perhaps not at all, could be read by traders as a signal that OPEC is preparing to curb excess production should prices lose another chunk from last month's record high.///