Oil prices sizzle as Iran raises nuclear stakes

Oil prices sizzle as Iran raises nuclear stakes

London (Platts)--12Aug2005

World crude oil futures sprinted to new record highs Friday, extending a bull
run in a market worried about an accident-prone refining system, the threat of
another potentially disruptive storm heading towards the US East coast and an
intransigent position by OPEC oil giant Iran over its nuclear program. Front
month IPE Brent crude oil futures roared up to $65.88/bbl, up 50 cts on
Thursday's all-time settlement price of $65.38/bbl. US light crude oil futures
also soared in electronic trade, selling above $66/bbl for the first time ever
on the Access system. Traders said there were no news headlines driving
sentiment. The market opened slightly lower earlier in the day as some players
took profits after the relentless price rise of the week, which has seen an
increase of nearly $5/bbl on the barrel since Monday. At 1130 GMT, September
Brent was trading 27 cts higher at $65.65/bbl.

There's bound to be a bout of profit taking ahead of the weekend," one Brent
player said. However, despite the lack of fresh news, traders said they could
not see the IPE Brent crude futures dropping significantly in price as "the
market is currently purely driven by momentum," a trader said, adding that
pension funds were still buying. With persistent refinery glitches in the US
providing further upside support and Tropical Storm Irene nearing land, market
players were unlikely to sell the market too aggressively ahead of the
weekend, analysts said. Although fundamentals of supply and demand have had
little to do with overheating prices, a tighter North Sea physical market
helped flip the Brent futures complex into backwardation and tightened the
discount of Brent to WTI, which remains in contango. Qatari oil minister
Abdullah al-Attiyah was quoted Friday as saying that technical problems at US
refineries rather than a shortage of crude oil supply were behind record-high
oil prices, which he said did not appear to have dampened economic growth.

The Qatar-based satellite television channel al-Jazeera published the
transcript of an interview it conducted Thursday with the Qatari minister,
quoting him as saying there was no shortage of crude on world markets. "The
message from OPEC in increasing its production has been positive and was well
received by markets," Attiyah was quoted as saying. There is no point
producing more crude oil, when most OPEC producers are pumping at capacity
when the problems are with refineries, he said. The US was facing a shortage
of oil products because of what he called "technical problems" with their
refineries rather than a lack of crude. The world appeared to be "absorbing
high oil prices" and this was evident in economic indicators of world markets
which registered unprecedented high levels, he said.

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