7 July 2005, 10:01  Oil prices reach new record high in Asian trade

Oil prices hit a record high in Asian trade with the benchmark New York contract rising to 61.53 usd a barrel at one stage as the market priced in possible disruption to US production from tropical storms in the Gulf of Mexico, dealers said. At 10.20 am (0220 GMT), New York's main contract, light sweet crude for delivery in August, was at 61.48 usd, up 20 cents from its closing record high of 61.28 usd in US trading overnight. Its previous closing high was 60.54 usd set on June 27. Heightened concerns over supplies after tropical storms disrupted US crude production in the Gulf of Mexico drove the benchmark contract higher, dealers said. "The main driver now is the tropical storms," said Mark Pervan, a commodities analyst with Daiwa Securities in Melbourne, Australia. "Investors are jittery, concerned about supply disruptions," he said. The onset of tropical storms Cindy and Dennis has forced the evacuation of 96 platforms and rigs in the Gulf of Mexico, causing the shut down of one-tenth of US crude production in the area, according to the US government. This equates to 12.7 pct of daily oil production in the region, which is currently about 1.5 mln barrels per day (bpd), it said. Cindy was downgraded to a tropical depression after making landfall early Wednesday but authorities were keeping a wary eye on Dennis, which they warned could hit the Gulf of Mexico this weekend at hurricane strength. Apart from the tropical storms, persistent concerns that refineries may struggle to meet demand during the fourth quarter when the northern hemisphere winter season begins will keep prices above 61 usd, Pervan said. "There is no real key resistance level at the moment," said Pervan. Trading could also be volatile ahead of the US government's weekly report on crude inventories in the country, dealers said. The report is normally released on Wednesday but was pushed back to Thursday owing to the Independence Day holiday on July 4. The Department of Energy reported last week that crude oil reserves in the United States, the world's biggest oil consumer, rose by 1.1 mln barrels to 328.5 mln barrels in the week ended June 24. Gasoline inventories climbed 300,000 barrels to 216.2 mln and distillates including heating fuel increased by 1.7 mln barrels to 113.2 mln. Jim Ritterbusch, analyst at consultancy firm Ritterbusch and Associates in the US, predicted that distillate stocks could have risen by 2.8 mln barrels for the week ending July 1. He expected gasoline stocks to be unchanged, due to increased consumption during the July 4 holiday, and crude stockpiles to fall 1.5 mln barrels.

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