New York's main crude oil contract slumped by over $1 a barrel after OPEC said it could still pump up to an extra 1.5 million barrels per day.
The benchmark contract, light sweet crude for delivery in September, skidded $1.40 to $42.75 in late afternoon trade. Earlier in the day it hit an all-time high of $44.34.
Prices dropped sharply after the Organisation of Petroleum Exporting Countries said it had surplus production capacity of a million to 1.5 million barrels per day, immediately available.
'OPEC continues to hold, at present, a spare production capacity of around 1-1.5 mb/d, which would allow for a immediate additional increase in production,' OPEC President Purnomo Yusgiantoro was quoted as saying in a statement.
'Furthermore, in response to expected future demand growth in the coming years, member countries have plans in place to further increase production capacity by around one mb/d towards the end of this year and in 2005,' he said.
Meanwhile, the oil giant Yukos received a massive boost today when justice ministry bailiffs told Russia's largest oil producer it can use previously frozen bank accounts to pay off back taxes.
Yukos said in a statement that it welcomed a decision that 'will allow us to steadily pay off our tax bill.'
