Fears mount over winter oil prices

The cost of oil remained close to its record high in London today amid concerns over tight supplies ahead of the winter.

Brent crude stood at 44.68 US dollars a barrel, down slightly on last night’s record of 44.93 US dollars – which was the highest since trading started in 1988.

Data released in the US last night showed that US crude oil supplies fell by 9.1 million barrels in the week to September 17 after Hurricane Ivan disrupted production.

The drop, which was larger than analysts had expected, added to an already jittery oil market and caused the cost of a barrel of light crude in the US to close at 48.35 US dollars, although it dropped back slightly to 47.95 US dollars today.

Bruce Evers, oil analyst at Investec Securities, said last night’s data on oil inventories had “sucked the market into a tizzy”, adding that the market was “very, very, tight at the moment”.

Richard Slape of Seymour Pierce said there was particular concern over the low crude supplies, since stocks should be building up ahead of the winter.

He said prices could “very easily” go through the 50 dollar mark, but said the real issue was whether they would continue to rise beyond that.

US oil prices last month hit a record 49.40 US dollars a barrel on fears of supply disruptions and their potential impact on the global recovery.

Repeated attempts by oil cartel Opec to lift production and take the steam off oil prices have had limited success as demand in China and India continues to grow.