Oil prices still surging in record week

The price of London Brent oil hit another all-time high on Friday on United States storm concerns at the end of a record-breaking week that saw New York crude soar beyond $84 per barrel.

The price of Brent North Sea crude for November delivery surged as high as $79,35 per barrel, beating Thursday’s record on fears a storm could threaten energy facilities in the US Gulf Coast.

In London later on Friday, Brent stood at $79,13 per barrel, up four cents from Thursday’s close.

Traders are worried that stormy weather in the US Gulf of Mexico, which accounts for about one-quarter of American oil output, could stretch tight global supplies ahead of peak US winter demand for heating fuel.

New York’s main futures contract, light sweet crude for delivery in November, eased 21 cents to $81,57 per barrel on Friday.

New York’s October contract had rocketed on Thursday to a record $84,10 per barrel before its expiry, while Brent surged past its previous August 2006 peak.

Prices are setting fresh records owing to the ”evacuation of oil rigs and platforms in the US Gulf of Mexico”, said Barclays Capital analyst Kevin Norrish.

He added: ”The concern is that what is currently only a tropical disturbance in the eastern gulf could develop into a tropical storm and companies have already started evacuating workers from the area. Both Shell and BP have reported that they are evacuating and shutting in all of their Gulf oil production.”

Sucden analyst Michael Davies noted that ”crude futures remain well supported by a number of fundamental factors”.

”The most recent support came from news that over 360 100 barrels of daily oil output was closed in the Gulf of Mexico, as energy producers were shutting down production facilities, because of a tropical storm developing in the region,” he added.

Crude futures have enjoyed a record-breaking week in New York and London as traders have seized on supply worries ahead of the forthcoming northern-hemisphere winter season.

Prices have also drawn strength from the diving US currency, which makes dollar-denominated commodities cheaper for foreign buyers using stronger currencies.

The US Federal Reserve’s decision on Tuesday to cut key interest rates by a bigger-than-expected 50 basis points to 4,75% has also perked up the oil market.

”Everybody is worried about the [US] inventory level going into the fourth quarter,” said Tony Nunan, energy risk manager at Mitsubishi in Tokyo.

The US Department of Energy had said on Wednesday that American crude inventories plunged by 3,8-million barrels in the week ending September 14, underscoring global supply tightness. That marked the 10th consecutive weekly drop and was almost double analysts’ consensus forecasts for a fall of about two million barrels. — Sapa-AFP

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