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Oil hits record, nears $49
Fresh violence flares in Iraq, fueling more concern about worldwide supplies.
August 19, 2004: 5:16 PM EDT

NEW YORK (CNN/Money) - Oil prices blazed to another record near $49 a barrel Thursday, spurred by violence in Iraq that sparked fresh worries about global supplies.

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Light crude for September delivery closed at a record $48.70 on the New York Mercantile Exchange, up $1.43 and just below its trading high of $48.80. October Brent crude closed at $44.33 in London, up $1.30.

U.S. crude oil prices have set records in all but one of the past 15 trading sessions and are up about $11 a barrel, or 29 percent, since the end of June.

Rising world oil demand has left little slack in the system to cope with outages in Iraq where Shiite militia have lived up to threats they will target oil infrastructure if U.S. forces do not leave the holy city of Najaf.

Saboteurs Thursday set fire to the headquarters of the South Oil Co. in Iraq's port city of Basra, Reuters news agency reported, quoting witnesses.

The attack did not appear to further disrupt supplies.

Iraq's southern pipeline has been shut since a sabotage attack on Aug. 9, curbing export flows to about a million barrels daily, half normal rates.

Iraq has lost an estimated $2.7 billion in revenue since the U.S. invasion from sabotage attacks against oil export pipelines, Oil Minister Thamir al-Ghadhban told Reuters.

Shiite militiamen said they will continue to target oil infrastructure in Iraq if U.S. forces do not leave Najaf, supporting the latest price rally. Despite hopes for an end to fighting in Najaf, there is no cease fire in effect on the ground, a senior Western official told CNN.

Iraq's interim government said radical Shiite Muslim cleric Muqtada al-Sadr must publicly or personally say he is disarming or will stand down, or Iraqi and U.S. forces will take military action against him, as fierce fighting erupted around a holy shrine in Najaf Thursday.

More demand

Evidence is mounting that China's fast-growing economy is spurring on oil demand, intensifying competition for supply with established oil consumers like the United States and Japan.

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Reuters reports that China's refineries have processed 17.2 percent more crude so far this year than in 2003, citing the State Statistical Bureau. Crude imports have soared nearly 40 percent from last year.

And China plans to spend about $3.4 billion to lay 6,000 miles of oil pipelines over the next three years, more than the total pipeline built in the past three decades.

Fellow emerging economy India said its biggest refiner, State-run Indian Oil Corp. Ltd., expects the nation's crude oil imports to rise by 11 percent between 2004 and 2005, with demand rising by nearly 4 percent.

Demand in the world's largest oil-consuming nation, the U.S., has jumped 3.4 percent this year. Inventory building slowed as rising consumption absorbed extra imports.

Prices have peaked in all but one of the past 15 trading sessions and are up more than $10 a barrel, or 28 percent, since the end of June.

U.S. government data released Wednesday showed commercial crude oil supplies for the week had fallen 1.3 million barrels to 293 million barrels last week, the third straight week of declines in the nation that guzzles nearly a quarter of the world's oil.

Perceived dwindling supplies and actual increased demand have created bullish market sentiment whereby any news of supply disruption has pushed prices higher.  Top of page




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Market indexes are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer Morningstar: © 2014 Morningstar, Inc. All Rights Reserved. Disclaimer The Dow Jones IndexesSM are proprietary to and distributed by Dow Jones & Company, Inc. and have been licensed for use. All content of the Dow Jones IndexesSM © 2014 is proprietary to Dow Jones & Company, Inc. Chicago Mercantile Association. The market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. FactSet Research Systems Inc. 2014. All rights reserved. Most stock quote data provided by BATS.