July 28, 2004
Fox News
NEW YORK — NYMEX crude oil futures rose to a record high of $43 a barrel despite an increase in U.S. crude inventories amid record imports, as traders worried about supply after Russian oil company YUKOS was ordered to halt sales.
The Energy Information Administration said on Wednesday that crude stocks rose in the United States by 1.2 million barrels to 300.5 million barrels amid record imports of 11.3 million barrels per day (bpd).
The $43 per barrel price is the loftiest level in the 21-year history of crude futures trading on the New York Mercantile Exchange.
Prices jumped after a company source said Russian bailiffs told YUKOS' four production units, which together pump 1.7 million barrels a day of oil, to halt sales of property -- including oil.
The news intensified concerns over the lack of spare capacity in the international oil system, as the OPEC cartel pumps at its highest level for a quarter of a century to meet strong global demand growth.
YUKOS said it had not complied with the order and was continuing to operate while it sought clarification of what chief executive Steven Theede called a "misinterpretation."
YUKOS has said it faces imminent bankruptcy as courts seek to enforce a $3.4 billion tax debt for 2000.
A halt to sales would hasten the collapse of the company, which pumps around 20 percent of Russian crude supply. Russia is the world's second biggest oil exporter behind Saudi Arabia after five years of rapid production growth.
Theede has asked for access to YUKOS frozen bank accounts to avoid a production halt later this week.
If the YUKOS turmoil prevents Russian production from meeting forecasts for further growth, the global oil supply system will be even more pressed to meet rising demand, analysts say.
OPEC has already jacked up production to 30 million barrels per day -- the highest level since 1979 -- to meet breakneck consumption growth in China and the United States.
Saudi Arabia has led the supply increase, eager to stop prices rising to a level that would hurt world economic growth and stunt fuel demand.
OPEC President Purnomo Yusgiantoro of Indonesia said that the cartel was doing its best to get prices down. "We are very sincere about pushing the price to be stable below $30 per barrel," he told Reuters.
But Venezuela's oil minister said OPEC had little spare capacity to help lower prices. "Most of the countries are near their production limits," Rafael Ramirez told Reuters.
Reuters contributed to this report.
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