By Jonathan Leff
SINGAPORE (Reuters) - Oil prices set a new record above $50
a barrel on Tuesday as a prolonged U.S. production outage
following Hurricane Ivan attracted fresh speculative buying.
U.S. light crude (CLc1) rose 58 cents to $50.49 a barrel,
beating by two cents last week's all-time record. London Brent
crude (LCOc1) rose 60 cents to $46.79 a barrel.
Supply anxiety is building ahead of the northern hemisphere
winter, when demand for heating oil surges. Inventories of
crude and distillates in the world's top energy user, the
United States, are running up to 4 percent below last year.
``U.S. production has been slow to recover from Hurricane
Ivan and people are worried by the low level crude and
distillate inventories ahead of winter,'' said Tetsu Emori,
chief commodities strategist at Mitsui Bussan Futures in Tokyo.
``People are still watching Nigeria and Iraq. With OPEC
producing almost at full capacity, any stoppage in Iraq's or
Nigeria's exports would upset the supply-demand balance. It's a
very dangerous situation.''
In the U.S. Gulf of Mexico, nearly 29 percent, or about
480,000 barrels per day (bpd), of oil output remained shut,
three weeks after Hurricane Ivan first hit the region, the U.S.
Minerals Management Service said on Monday.
Dealers will now look to U.S. oil inventory data, due out
on Wednesday, to gauge how comfortable oil supplies are in the
weeks ahead of winter.
A Reuters poll of eight analysts predicted on average a
fall in distillate stocks -- including heating oil, the main
winter fuel in the northeast of the country -- by 800,000
barrels and a drop in gasoline stocks by 600,000 barrels.
The weekly report by the Energy Information Administration
due was expected to show crude stocks rising in the week to
Oct. 1 by 1.1 million barrels from the week earlier.
NIGERIA, IRAQ ON RADAR
Oil prices had eased on Monday after Nigerian rebels
withdrew a threat to target the country's over 2.3 million bpd
of oil production facilities, but concerns lingered over the
OPEC member's stability in the near term.
Iraq also remains volatile, with saboteurs regularly
attacking pipelines. On Monday an internal line linking the
country's north and south fields was hit, although this did not
affect exports.
Together the two countries produce over 4.5 million bpd --
more than twice the amount of spare production capacity held by
members of the Organization of the Petroleum Exporting
Countries (OPEC), most of that in Saudi Arabia.
OPEC President Purnomo Yusgiantoro said on Tuesday he
expected oil prices to fall in the first part of next year if
supply fears in the Middle East -- and particularly the
disruptive turmoil in Iraq -- were to fade.
But market bulls are encouraged by signs that speculative
funds, a major factor in this year's steep oil price rally,
continue to buy into the market, despite the highest prices on
record.
Speculators on crude oil on the New York Mercantile
Exchange increased net long positions in the week ended Sept.
28 in a bet prices would rise, the U.S. Commodity Futures
Trading Commission said.
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