Oil prices surged to new record highs again today, taking US crude above $54, with global supplies hounded by outages that are thwarting efforts to build winter heating fuel inventories.
US crude set a record $54.45 a barrel, marking a sixth successive day of all-time peaks. This afternoon it was trading at $54.16, up 52 cents on the day.
In London, Brent crude hit $51.50 a barrel, before retracing to $51.10, up 44 cents. Prices were bolstered by news that saboteurs had set fire to a major oil pipeline feeding the Bonny export terminal in Nigeria, which exports 500,000 barrels per day (bpd) of crude.
Operator Royal Dutch/Shell said it was diverting supplies to an alternative pipeline and that 20,000 bpd of crude had been shut in. Nigerian crude is prized for its yield of transportation and heating fuels.
Nigeria, OPEC's sixth biggest producer, has managed to keep exports steady despite a series of threats this month, including this week's general strike over fuel prices that is due to continue until Friday.
Oil prices have leapt 65% this year as the strongest demand growth in over two decades caught producers by surprise, leaving a tightly stretched global supply system little leeway to deal with outages. Worries now are focused on winter heating oil inventories.
Winter fuel is in short supply around the globe, with European distillate stocks 3.4% below last year and kerosene supplies in Japan down 20% from 2003. In the US, weekly distillate stockpile data, due out on Thursday, is expected to record a fall this week of 1 million barrels.
Production impediments have haunted the world market all year, with US Gulf of Mexico oilfields still running low after last month's Hurricane Ivan and Nigeria and Norway grappling with labour disputes.
The usual US pre-winter stockbuild has been thwarted by the effects of Hurricane Ivan, with around 475,000 bpd of US Gulf production still out of commission a month after the storm hit. Two-thirds of that is expected to be shut in past the end of October, the government's Minerals Management Service said last week.
In Norway, a rig workers strike is expected to widen today, forcing the world's third-largest exporter to shut in 55,000 bpd.
OPEC member Nigeria, which pumps around 3% of the world's oil, has managed to keep exports steady despite a series of threats this month, including this week's general strike over fuel prices that is due to continue until Friday. The strike brought most Nigerian cities to a standstill yesterday and closed many industries, but has not hurt oil exports.
High oil prices are beginning to slow the world economy and encourage fuel efficiencies in China, the International Energy Agency said today.
Adjusted for inflation, world oil prices remain far below the levels reached in the wake of the 1979 Iranian revolution when prices surged to upwards of $80 a barrel in today's money. But prices have more than doubled from about $20 a barrel in New York at the start of 2002. They have surged by about 65% since the start of this year.
