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Reuters: UPDATE 1-Shell CEO says psychology behind high oil prices

Wed Sep 12, 2007 4:30 PM BST

(Adds detail and comment. In U.S. dollars)

CALGARY, Alberta, Sept 12 (Reuters) – Royal Dutch Shell Plc’s (RDSa.L: Quote, Profile , Research) top executive said on Wednesday he sees no fundamental reason for crude oil prices that have jumped above $78 a barrel.

“No one has to wait at the gas pumps of the world. There is no physical problem,” Shell Chief Executive Jeroen van der Veer told reporters in Calgary.

“(There is) a lot of psychology in the price.” he said.

Oil rose above $79 a barrel for the first time on Wednesday morning before falling back as U.S. government data showed crude inventories took an unexpected drop last week.

Van der Veer said the price had risen above what the industry needs to sustain its operations. But he added that he expected more volatility in prices because of “the psychological component.”

His comments echoed those made by the chief executive of Exxon Mobil Corp (XOM.N: Quote, Profile , Research) last week. Rex Tillerson told a Calgary business audience that $70 a barrel oil prices were not justified by market fundamentals.

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