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Oil Prices Rise Again After Brief Pause

The New York Times: Oil Prices Rise Again After Brief Pause

“there is uncertainty over the amount of reserves held by oil companies and Middle Eastern countries.”: “cited Royal Dutch Shell’s acknowledgment in January that it had less reserves than it initially reported.”: “also concern about oil production in Nigeria”

By THE ASSOCIATED PRESS

Published: August 5, 2004

SINGAPORE (AP) — Crude oil futures rebounded Thursday from an overnight tumble on doubts about whether the Organization of Petroleum Exporting Countries could supply enough oil to meet demand.

The September light sweet crude contract on the New York Mercantile Exchange traded at US$42.98 a barrel at 0654 GMT, up US$0.15 in an active electronic trading session, with 3,794 contracts changing hands.

Prices reached a record high of US$44.34 per barrel Wednesday — up US$12.50 from last year — even though OPEC said it was prepared to boost production by up to 1.5 million barrels a day to plug the supply gap.

Traders said they had misgivings about the announcement, which contradicted a statement Tuesday by OPEC President Purnomo Yusgiantoro saying the group couldn’t pump any more oil in the immediate future.

“Everyone is relying on OPEC for oil, but there is doubt,” said Energyasia.com analyst Ng Weng Hoong, adding that there is uncertainty over the amount of reserves held by oil companies and Middle Eastern countries.

He cited Royal Dutch Shell’s acknowledgment in January that it had less reserves than it initially reported.

On London’s International Petroleum Exchange, September Brent crude futures are likely to open higher.

Oil prices have been steadily rising since July 28, mainly on worries about production capacity constraints due to uncertainty over troubled Russian oil producer Yukos and concerns about the reliability of supplies from Iraq, where saboteurs have attacked pipelines and disrupted exports.

Terror fears in the United States have also played a role in the price spike following Washington’s warning Sunday that al-Qaida was planning attacks on key financial institutions in New York, New Jersey and Washington.

There is also concern about oil production in Nigeria, where labor unrest is common, and in Venezuela, which faces a presidential recall ballot in less than two weeks.

“Nigeria, Venezuela, Russia, these are jokers in the pack,” said Energyasia’s Ng. “They come out from time to time and cause additional headaches. In the past, we tended to ignore that but not anymore.”

Oil markets are fretting that Yukos’ 1.7 million barrels per day of crude output may dry up if it goes bankrupt.

Meanwhile, Ng warned of further price increases in northern countries as winter approaches.

“We’re going to move into the winter season and there will definitely be stock building in the northern hemisphere. In Asia, China, Japan and Korea are likely to drive kerosene prices up,” he said.

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