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Oil prices ease from record high points

London's Brent North Sea crude oil for September delivery fell by 33 cents to 39.70 dollars per barrel in early deals. New York's reference contract, light sweet crude for delivery in September, lost 35 cents to 43.45 dollars per barrel in pre-opening electronic trading.

The New York contract had hit a fresh record high point of 43.92 dollars per barrel in Asian trading yesterday before drifting back. The easing of prices was due to "profit takings and a little technical correction", Investec analyst Bruce Evers said. New York's main crude oil contract had shot to an all-time closing high level of 43.80 dollars on Friday, as a financial crisis at Russian oil titan Yukos unleashed a fresh wave of speculative buying.

London's Brent North Sea crude for September had risen 77 cents to 40.02 dollars per barrel, the first break above 40 dollars since October 1990 after the Iraqi invasion of Kuwait. Yukos faces a 3.4-billion-dollar (4.1-billion-euro) tax bill for 2000, which it cannot pay because its assets have been frozen, prompting concerns that it may have to slash output. It comes as global demand is expected to increase by 3.2 per cent this year to 81.4 million barrels per day, and to 83.2 mbd in 2005, the International Energy Agency (IAE) has forecast. China, whose imports rose by 30 per cent last year, will need 11 mbd by 2025 compared to its current consumption of 5.5 mbd. "The problem of oil demand booming beyond the markets ability to supply has already arrived, well short of winter," Societe Generale economist Deborah White said yesterday. "Higher oil prices alone are unlikely to rein in China... the country's self-transformation and its manufacturing for exports are the primary drivers of oil demand," she added.

Adjusted for inflation, world oil prices remain far below the levels reached in the 1970s oil shock, but have shot up dramatically from the beginning of 2002, when the price of a barrel of oil hovered around 18 dollars. Present-day companies are not complaining however. Norway's Statoil yesterday announced a tripling of pre-tax profit in the second quarter compared with the same period in 2003, pointing out that high oil prices were a main factor for the sharp jump.