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The Scotsman: Oil touches new record high

Fri 14 Sep 2007

NEW YORK (Reuters) – Oil held near $80 a barrel after earlier rising to its third record high in as many days on Friday amid concerns over low inventories of fuel in consuming nations.

Three refineries in the Port Arthur, Texas-area were working to restore operations after losing power on Thursday when Hurricane Humberto battered the U.S. Gulf Coast. The storm is now a tropical depression.

The temporary loss of three refineries renewed concerns over fuel stocks in the United States, where supplies of crude fell last week to the lowest level in eight months, while gasoline stocks slid to their lowest in two years.

U.S. crude rose six cents to $80.16 a barrel by 1:32 p.m. EDT (6:32 p.m. British time), having earlier reached a record high of $80.36.

London Brent crude climbed one cent to $77.13.

Total and Valero Energy said they were restarting their Port Arthur refineries, while Royal Dutch Shell said some power was restored at the refinery belonging to its Motiva Enterprises joint venture.

Hurricane risks, falling U.S. inventories and only a modest output increase from OPEC have fuelled the recent hike in oil prices to record highs and encouraged speculators to increase long positions.

OPEC agreed this week to increase output by 500,000 barrels per day from November 1 and the group has expressed concern that turmoil in world financial markets could hurt U.S. and global economic growth, which could dent oil demand.

CREDIT CONCERNS

Mortgage lender Northern Rock was forced to turn to the Bank of England on Friday for emergency financing after being unable to secure sufficient funds in the interbank market.

Stock markets fell as the crisis at the bank renewed fears of further turmoil in global credit markets, which have been roiled by heavy losses suffered by some banks and hedge funds that invested in the U.S. subprime mortgage sector.

The credit crunch has raised fears of a slowdown in the U.S. housing sector hitting overall growth in the world’s top oil consumer.

“Although the oil markets give the impression of significant tightness, recent weekly and monthly data show U.S. oil demand growth rates are anaemic at best. If a possible U.S. recession ends up impacting China, the two pillars of oil demand strength would be shaken, in our view,” concluded analysts at Deutsche Bank in a research note.

(Reporting by Robert Campbell and Matthew Robinson in New York, Felicia Loo in Singapore, Janet McBride and Santosh Menon in London)

(c) Reuters 2007. All rights reserved.

This article: http://business.scotsman.com/latest.cfm?id=1476722007

Last updated: 14-Sep-07 19:45 BST

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