Oil hovers above $82, supply worries linger

LONDON - Oil hovered above $82 a barrel on Thursday as sinking U.S. crude inventories and the threat of a storm gathering near Florida increased worries of a winter supply crunch in the world’s top consumer.

By (Reuters)

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Published: Thu 20 Sep 2007, 4:24 PM

Last updated: Sat 4 Apr 2015, 11:42 PM

Oil has traded above $80 for the past week, but OPEC officials and oil analysts say the lofty price is unsustainable.

U.S. light crude gained nine cents to $82.02 a barrel by 0920 GMT, after a record-high of $82.51 on Wednesday, the sixth straight session to hit a record. London Brent crude fell 47 cents to $78.

Oil has risen by a third this year, driven by worries of fuel shortages during the Northern Hemisphere winter, supply risks from Mexico to Iran and flows of money into oil and out of poorly performing equity markets.

“In the short term there are so many elements that are supporting prices,” said Andrew Harrington, commodities analyst at Australia and New Zealand Bank.

“But unless there’s a major disruption, we should see softer prices in the medium term, possibly in the high $60s,” he added.

Some members of the Organization of the Petroleum Exporting Countries share that view. Iran, the group’s second biggest producer, said oil above $80 would not be long-lived.

“This situation is not stable and cannot be permanent,” said Hossein Kazempour Ardebili, Iran’s OPEC governor.

OPEC agreed last week to add 500,000 barrels per day of supply from November to help calm consumer concerns over high prices and tighter oil inventories.

Some analysts said the move was too little, too late.

Supply concerns deepened after more oil firms on Wednesday pulled non-essential staff from offshore platforms in the Gulf of Mexico because of the threat of a storm, but only a small amount of production has stopped so far.

The U.S. National Hurricane Center said a tropical disturbance over Florida could strengthen into a tropical cyclone and cross into the Gulf of Mexico in the coming days, threatening a quarter of the nation’s oil production.

Wednesday’s record-high oil price came after data showed crude oil stocks in the United States fell by 3.8 million barrels last week, nearly twice the 2 million-barrel draw expected in a Reuters poll of analysts.

Further supporting oil prices, OPEC-member Iran, responding to Western debate about the possibility of war over its nuclear plans, said it would use any means to defend itself if attacked and could bomb Israel if the Jewish state launched a strike.



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