Oil Prices Hit Record New High of $75.89 a Barrel!

The Associated Press
Thursday, July 13, 2006; 7:20 AM

LONDON -- Oil prices hit a new intraday high near $76 a barrel Thursday in a market agitated by escalating violence in the Middle East and news of explosions on Nigerian pipelines.

Israeli warplanes struck the runways of Beirut's international airport as part of a campaign against Hezbollah, which attacked Israeli border positions Wednesday and captured two soldiers.

Adding to market tensions was news that Iran, OPEC's No. 2 supplier, was referred back to the U.N. Security Council Wednesday after nuclear talks failed to yield agreements.

"Geopolitics, the markets, Iran and Iraq and Lebanon, all that turmoil is in the front of people's minds and the tensions in the region gets the most attention," said Kevin Norrish, energy analyst for Barclays Capital in London.

"But, it's also due to the spare capacity in the region, and we've known about this for a while now. It's difficult to replace lost output right now.," Norrish said.

Light, sweet crude for August delivery on the New York Mercantile Exchange shot up 94 cents to $75.89 a barrel, surpassing the previous intraday high of $75.78 set last Friday. By midday in Europe, the price eased back to $75.82, up 87 cents.

Front-month August Brent on London's ICE Futures exchange also hit a high, climbing $1.18 to $75.57 a barrel, above its previous $75.09 per barrel high set Friday.

"With little prospect of any good news on Nigeria, Iran and global demand any time soon, the risks remain on the upside and the prospect of a move to, and through, $80 per barrel must be very real, very soon," said Paul J. Harris, head of energy and emissions at Bank of Ireland Global Markets in Dublin, Ireland.

The hurricane season in the Gulf of Mexico could be a catalyst for even more price spikes, Harris said.

Heating oil rose nearly 3 cents to $2.0440 a gallon; gasoline rose nearly 2 cents to $2.2750 a gallon, and natural gas futures gained 2 cents to $5.800 per 1,000 cubic feet.

In Nigeria, officials said twin explosions hit oil installations belonging to oil company Agip, a unit of Italy's Eni SpA, in the volatile southeastern delta region. Officials suspected sabotage in the explosions Wednesday along two pipelines in Baleysa state.

One of the blasts blew apart an 18-inch pipeline at the Clough Creek Tepidapa flow station, and heavy spillage was reported, said Dikivie Ekiogha, an oil industry adviser to the local state governor. Another local official said an explosion hit a 10-inch riverside pipeline in Lagoagbene.

Eni issued statement denying a report regarding alleged sabotage of Agip's oil line that is causing a loss of 120,000 barrels a day.

"The news is without foundation," Eni said. It said there had been minor damage in recent days that has already been repaired with only a tiny loss of oil.

Weekly U.S. government data showed a sharp decline in domestic crude oil inventories.

The Energy Department said commercially available crude oil stocks shrank by 6 million barrels to 335.3 million barrels last week, though crude supplies are still 2 percent higher than last year.