Oil hits record $80 on tight supply
Wed Sep 12, 2007 2:14 PM EDT

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By Richard Valdmanis
NEW YORK (Reuters) - Crude oil prices vaulted to a record high $80 a barrel on Wednesday as dealers focused on tight inventories in top consumer the United States ahead of peak winter demand.

A rash of fires at BP's oil fields in Alaska's North Slope added to the record run, though BP said the accidents had minimal impact to production that was already being curtailed by routine maintenance.

The surge in oil prices came a day after OPEC agreed to a small production hike in an effort to soothe consumer nations' fears that soaring crude costs could slow economic growth.

"The OPEC outcome was not enough of a shocker to turn around a market that likes to read extremes," said Olivier Jakob of oil consultancy Petromatrix.

U.S. light crude for October delivery was up $1.59 at $79.82 per barrel at 2:07 p.m. EDT after setting a record high of $80.00 a barrel earlier. London Brent crude was up $1.35 at $77.73 a barrel.

Crude oil stocks in top consumer the United States fell 7.1 million barrels last week to their lowest level in eight months ahead of the winter heating season, according to the U.S. Energy Information Administration.

Analysts had expected a fall of 2.4 million barrels.

"The reality is that the crude tightness in Europe and Asia has begun to affect the U.S. market in a big way," said Antoine Halff, analyst at Fimat Research in New York. "In retrospect, it validates OPEC's decision to increase production."

Heating oil futures prices also struck a record Wednesday of $2.2139 a gallon, up 3.12 cents.

Experts said OPEC's deal in Vienna Tuesday to raise output by a half a million barrels per day starting November 1 was not enough to reverse rising energy prices.

"It legitimises the excess production that was there relative to OPEC's previous implied quota and not much more," said Harry Tchilinguirian, senior oil market analyst at BNP Paribas. Continued ...
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