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Posted on 07/13/2006 3:26:24 AM PDT by RWR8189
LONDON (Reuters) - Oil surged to a record high near $76 on Thursday on renewed worries over supply from major exporter Nigeria and as conflict between Israel and Hizbollah in Lebanon heightened international tensions.
Prices also rose as the Iran nuclear row appeared to be heading to the U.N. Security Council, North Korea walked out of talks with South Korea and crude inventories in top oil consumer the United States fell more than expected.
"Geopolitical risk is out of control," said Tony Nunan, a risk manager at Mitsubishi Corp. "There's a pipeline attack in Nigeria, Israel is taking a strong stance and that's adding fuel to the fire, but more than anything it's U.S. gasoline demand holding up and the Iran situation."
U.S. crude traded 82 cents higher at $75.77 a barrel by 0958 GMT, after hitting a record $75.89. London Brent was up $1.13 at $75.52 after reaching a record $75.60.
In Nigeria, two suspected explosions at a crude oil pipeline operated by Italy's Agip caused massive oil spills, state government officials said on Thursday. Eni denied reports of sabotage and said the damage would be repaired soon.
Royal Dutch Shell Plc (RDSa.L) has already had to shut down 473,000 barrels per day of Nigerian supply, almost a quarter of output in Africa's top oil supplier, due to attacks by rebels.
Adding to Middle East tensions, Israel struck Beirut airport and blockaded Lebanese ports on Thursday, intensifying reprisals that have killed 47 civilians since Lebanese Hizbollah fighters seized two Israeli soldiers and killed eight a day earlier.
Supply breaks and growing tension in the Middle East means oil prices may rise further, analysts say. The Middle East pumps about a quarter of the world's oil, but neither Israel nor Lebanon are producers.
"It's a strong combination of positive fundamentals and heightened geopolitical tensions pushing oil to new highs," said Kevin Norrish of Barclays Capital. "It's difficult to see why the upward momentum shouldn't continue."
IRAN, U.S. DEMAND SUPPORT
Oil in New York is up 24 percent this year because of supply cuts in Nigeria, the dispute over Iran's nuclear work and a flow of investment fund money into commodities. North Korea's missile tests have added to global tensions.
Iranian President Mahmoud Ahmadinejad said on Thursday the world's fourth-largest oil exporter would not abandon its right to nuclear technology after Tehran's case was referred back to the U.N. Security Council.
And in Asia, North Korea blamed the South for the collapse of their first high-level talks since Pyongyang's missile tests sparked a regional crisis, saying Seoul would "pay a price" for the failure.
Oil prices are also drawing strength from rising demand in the United States in the face of high prices and robust world economic growth.
U.S. crude inventories slid 6 million barrels last week as imports fell, a government report said on Wednesday. The drop was five times larger than the 1.2 million barrels forecast among analysts polled by Reuters.
U.S. motorists, who use over 40 percent of the world's gasoline, bought 1.7 percent more fuel in the past four weeks compared with a year ago. The data covered the U.S. Independence Day holiday weekend when annual gasoline demand peaks.
Despite near-record prices, growth in oil demand will rise more quickly through to 2011 than it did in the past decade, the Paris-based International Energy Agency said on Wednesday.
The IEA, adviser to 26 industrialized nations, expects the world will need an extra 1.57 million bpd of oil to fuel economic growth in 2007, up from growth of 1.21 million bpd this year.
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In Related News: The price of Persian Rugs due to skyrocket.
"Geopolitical risk is out of control," said Tony Nunan, a risk manager at Mitsubishi Corp."
Short range target could be $80 shortly.
If Iran pulls another act of jihadic insanity crude will soar off the trending chart.
yeah, this is getting really scary. ANWR anyone? Too bad it won't matter.
everyday its a record day
this must be a record year
Lee Raymond is doing a happy dance. This really is getting ridiculous. Who really gave a shit about Nigeria till now?
Despite the legitimate market factors, it is clear traders and the futures market have abandoned any pretense of rationality.
As I have said a gazillion times, the US doesn't need to produce everything it uses. 2 mbpd (ANWR and offshore could do it easily) would seriously alter the world market.
Do I hear 76, 77? Do I hear 77-80. Do I hear 85-90, what am I bid? "What am I bid", said the happy auctioneer.
Persian Rugs to SOAR? How do I ketch the right one?
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