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World oil prices hit new highs
September 27, 2004
World oil prices broke fresh records on Monday, with US light crude closing in on the $50 a barrel mark, and Brent crude topping $46 in London.
Brent crude hit a high of $46.28 before closing 57 cents up at $45.90 while US light crude reached a 21 year high of $49.74 before dipping to $49.35.

The president of Opec said earlier that the producers' cartel would not review output quotas before December.

The latest highs are due to hurricanes off the US, the Opec president said.

Ivan's impact

Analysts said they expected US prices to breach the $50 mark for the first time in the next few days.

Oil traders said fears that political unrest in Nigeria's oil producing region would cut output had added to pressure on prices.

"News of new pipeline damage in Iraq, trouble in Nigeria and fighting between security forces and al Qaeda members in Saudi Arabia have all pushed prices to a new high," said Rob Laughlin, director of trading at GNI-Man Financial.

Brent crude opened in London just 4 cents below Friday's all-time peak of $45.75, but quickly moved higher.

Opec president Purnomo Yusgiantoro questioned the significance of the latest price surge in Asia, saying "this is not the price of the Opec basket, it is the price of US crude".

"This is because of Hurricane Ivan and some problems in other places," said the Opec chief, who is also Indonesia's oil minister.

Storm damage

Latest Brent crude price

"We will wait until we meet in Cairo," he added, referring to Opec's next ministerial meeting in December.

"This is not a supply and demand problem. Opec supply is enough."

Hurricane Ivan temporarily crippled offshore oil production and coastal refinery operations in the Gulf of Mexico, reducing the region's daily output.

Since then, the Caribbean and southern US have suffered another major storm, Hurricane Jeanne.

Slow recovery

Oil production in the Gulf of Mexico was 28% below its normal daily level at the end of last week, according to data from the US Minerals Management Service.

The Gulf of Mexico usually produces 1.7 million barrels of oil a day. Since Hurricane Ivan struck, about 10 million barrels of output have been lost.

Ivan caused a squeeze on already depleted US fuel stocks, prompting the US Energy Department to take the unusual step of releasing some of the national stockpile of crude oil to refineries.

Many factors have pushed oil prices to break records this year, ranging from insurgency in Iraq which has disrupted exports, to strong demand from the recovering US economy and fast-growing China.

Opec agreed to raise its production quota by 1 million barrels a day to 27 million barrels at its Vienna meeting earlier this month.

Opec reaffirmed its commitment to a target price for crude oil of $22-28 per barrel.


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