Oil prices resumed their upwards march on Thursday as supply fears persisted despite a lifeline for Russian energy giant Yukos and efforts by Opec to reassure markets it still has spare output capacity.
Brent North Sea crude oil for September delivery rose 55 cents to $40,25 a barrel in early trading in London.
The contract had tumbled by 94 cents on Wednesday, just hours after setting a record of $40,99 a barrel.
New York’s benchmark contract, light sweet crude for delivery in September, climbed 45 cents to $43,28 in pre-opening electronic deals.
The contract plunged $1,32 on Wednesday, having earlier hit an all-time high of $44,34.
But analysts warned the respite for oil consumers could prove short-lived.
”Onwards and upwards as oil prices head towards $50,” analysts at Barclays Capital told clients.
”The market continues to be dominated by the potential for a severe supply crunch as global oil demand swings up towards its seasonal peak,” they added.
Prices had dived on Wednesday after Russian Justice Ministry officials said Yukos, Russia’s biggest oil producer, can use previously frozen bank accounts to keep running on a daily basis and pay off back taxes.
And Opec said that it has surplus production capacity of up to 1,5-million barrels per day (bpd) immediately available.
”Opec continues to hold, at present, a spare production capacity of around one to 1,5-million bpd, which would allow for an immediate additional increase in production,” Opec president Purnomo Yusgiantoro said 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 million bpd towards the end of this year and in 2005,” he said.
Prices had soared earlier in the week after Yusgiantoro said Opec ”can’t increase supply at this moment”.
And the market took little comfort from Opec’s latest efforts to rein in prices.
”Opec has finally admitted that it has spare capacity of only one to 1,5-million barrels a day,” said Investec analyst Bruce Evers.
”Opec is trying to calm down a very nervous market, that’s all. Prices are going to remain firm for quite some time.”
Opec members agreed in June to raise the cartel’s output ceiling by two million barrels per day in July and by a further 500 000 barrels from August 1.
Traders were also keeping a nervous watch on Venezuela ahead of an August 15 referendum there, which the opposition hopes will unseat controversial President Hugo Chavez.
”The concern over supply disruptions still remains on the forefront of traders’ minds,” said Commerzbank analyst David Thomas.
”There are still potential supply disruptions in the Middle East due to terrorist activity, and Venezuela remains an issue in the near term. Those two issues are still leading to a substantial premium in oil prices above fundamental levels.”
Exports from Venezuela, a major oil exporter to the United States, were crippled in 2002 by a strike.
The latest opinion polls generally show a majority of Venezuelans would vote for Chavez to serve the remaining two years of his term, but there are fears that unrest and strike action could disrupt the country’s oil production.
”There is a concern that Venezuelan oil workers go on strike again if Chavez doesn’t call for nearer elections,” said Evers.
”That would be seriously bad news. Venezuela produces between 2,2 and 2,3 [million barrels a day], the US being one of the main importers,” he added. — Sapa-AFP