Oil prices rose to another record high yesterday on US economic data showing inflationary pressure was held in check in July and ahead of weekly inventory data on Wednesday expected to show a decline in crude stocks.
US light crude oil for September rose as much as 93 cents to $46.95 (€38.07) a barrel, another record in the 21-year history of the New York Mercantile Exchange contract, before settling at $46.75 at the close. US prices had set all-time highs in all but one of the previous 12 trading sessions.
In London, North Sea Brent rose 30 cents to close at $42.99 a barrel.
Prices rose after the US government reported consumer prices dropped in July for the first time in eight months in a report showing underlying inflation pressures largely in check.
"The latest consumer price data implied demand will continue to be strong because it appears that higher energy prices have had little impact on overall inflation," said Mr Phil Flynn, an analyst at Alaron Trading in Chicago.
"It looks like the concerns that high oil prices will drive inflation higher were overblown," Mr Flynn added.
In real terms, adjusted for inflation, current oil prices are still well below 1980's peak of $80 a barrel, following the Iranian revolution. But average US prices this year of $38 are approaching those of 1974, the first oil shock, when crude averaged an inflation-adjusted $43 during the Arab oil embargo.
Traders were also awaiting the US Energy Information Administration's inventory data for the week ended August 13th, due to be published today.
A Reuters survey of eight analysts forecast a fall of one million barrels in commercial US crude stocks.
In the previous week crude stocks fell 1.9 million barrels to 298.6 million.
US demand so far this year is running at a strong growth rate of 3.5 per cent, despite high prices.
Oil's higher closing price reversed early falls spurred by a convincing referendum victory in Venezuela for President Hugo Chavez and after Russia's Yukos oil company said it had received a government assurance on September exports.
Continued disruption in Iraqi supplies and strong world fuel demand underpinned prices, which remain $9 a barrel, or 25 per cent, higher than at the end of June. Insurgents set fire to an oil well in southern Iraq on Monday. Iraqi oil exports have been running at 900,000 barrel per day, about half the normal rate, after saboteurs blew up a pipeline eight days ago.
"We reckon there's at least $10 in the oil price for political uncertainty," said Mr Medhi Varzi, senior energy consultant at Dresdner Kleinwort Wasserstein. "One day it's one country, another day it's another."
Meanwhile, Yukos lost an appeal on Tuesday to pay its $3.4 billion tax bill with shares it owns in oil company Sibneft, Russian news agencies reported.
Yukos still holds 20 per cent of Sibneft after their failed merger last year and has offered to use Sibneft shares to pay off the tax claim. - (Reuters)
