|
 |
| Traders work
in the oil futures pit at the New York Mercantile Exchange, Monday
Aug. 1, 2005 in New
York. |
Oil prices jumped $1 a barrel to a new high Monday after the death of
Saudi Arabia's King Fahd raised concerns about the kingdom's long-term
political stability. The rally, which faded late in the day, also stemmed
from traders' skittishness about U.S. refinery glitches and Iran's nuclear
program.
Saudi Arabia's oil policy is not expected to change
now that power has formally shifted to Fahd's 81-year-old brother, the
de facto
leader during
the past decade. However, with oil consumption rising around the world and
only a limited amount of excess production capacity available, energy
traders are easily put on edge by a change in the weather in an
oil-pumping region, let alone a transfer of authority within the world's
biggest oil producer.
"The market is hypersensitive to facts, rumors and noise because the
supply cushion is gone," said Larry Goldstein, president of the New
York-based nonprofit Petroleum Industry Research Foundation.
Light sweet crude for September delivery briefly rose as high as $62.30
a barrel on the New York Mercantile Exchange, then retreated to settle at
$61.57, a rise of $1. The previous closing high on Nymex was $61.28, set
July 6, while the previous intraday high was $62.10.
Oil prices are still well below the inflation-adjusted high of about
$90 a barrel set in 1981.
Adding to the oil market jitters was the imminent resumption of uranium
reprocessing in Iran. It is one step below uranium enrichment, which is
necessary for the development of nuclear weapons. Iran suspended
enrichment of uranium in November under international pressure, but the
country maintains that it has the right to resume the activities.
Traders also kept an eye on refinery operations in
the United States, where the rate of gasoline and heating oil output has fallen in recent weeks due
to hurricanes in the Gulf of Mexico. Last week, two refinery fires
— one in Texas, one in Louisiana — stifled production, albeit to
a limited extent.
(Agencies) | 
Updated: 2005-08-02 11:17
