World oil prices on Monday soared above $69 per barrel for the first time in more than four months, owing to global supply concerns, before easing on profit-taking, analysts and dealers said.
New York’s main contract, light sweet crude for delivery in March, hit an intraday peak of $69,20 — the highest level since September 1 last year.
The contract stood later on Monday at $67,81 per barrel in electronic trading, a fall of 67 cents compared with Friday’s close.
In London, the price of Brent North Sea crude for March delivery dropped 36 cents to $65,84 per barrel after a peak of $67,11.
”The market seems to be determined to pass $70,” Global Insight analyst Simon Wardell said.
Dariusz Kowalczyk, an investment strategist with CFC Seymour Securities, said the easing of prices, after the initial surge past $69, had been expected.
”We should not be surprised to see it fall because it is really overbought according to the technical charts.”
Crude oil futures had hit historic high prices in nominal terms last August.
Following the devastation wrought by Hurricane Katrina on United States Gulf Coast energy installations, prices struck $70,85 per barrel in New York and $68,89 in London.
That marked a 70% jump between January and August 2005, before a pull-back in prices owing largely to mild weather across the northern hemisphere in the run-up to winter.
However, prices began rebounding strongly last week on supply concerns in major oil producers Iran and Nigeria, and owing to al-Qaeda’s apparent threat against the US.
Unrest in Nigeria has already disrupted production in Africa’s biggest producer, while simmering tensions between Iran and the West over Tehran’s controversial nuclear programme are also at play, dealers said.
”In the short term, it is all about geopolitical drama,” said Victor Shum, an analyst with energy consultancy Purvin and Gertz in Singapore.
Markets were keeping a watch also over Kuwait, which on Monday headed for a major political showdown after the government declared the oil-rich state’s new emir too ill to rule and asked Parliament to start action to remove him.
The power struggle, barely a week after Sheikh Saad al-Abdullah al-Sabah became ruler following the death of the previous emir, has plunged the Gulf emirate into an unprecedented political crisis.
Amid the recent strong rally in crude futures, markets are drawing comparisons to the Iranian revolution in 1979, when oil prices surged to the highest level to date in real terms.
Adjusted for inflation, oil prices in New York had hit $87,23 per barrel on November 30 1979, in today’s money, according to analyst estimates.
King Abdullah of oil kingpin Saudi Arabia said in an interview broadcast on Monday that current prices are too high, damaging the economies of developing countries.
”From our perspective, I personally feel that the current price of oil is too high,” the monarch said in an interview with an Indian television channel.
”The price is damaging to developing countries who subsequently have to suffer. The price needs to be at a more moderate level,” he told the NDTV channel ahead of a four-day trip to India starting on Tuesday. — Sapa-AFP