[Peakoil] Fuel price under pressure again

[Alex P]

>From Jenny

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Fuel price under pressure again
>From correspondents in New York

August 08, 2006 06:33am

Article from: Agence France-Presse
MOTORISTS could face more pain at the petrol pump after crude oil prices 
flared overnight.

In London, Brent futures hit a record high of $US78.64 after a pipeline 
spill forced BP to start closing production from America's biggest oil 
field. 

The incident in Alaska came as prices were already on the boil because of 
supply concerns in major producing countries Iran and Nigeria, violence in 
the Middle East and strong global demand.

In London, the price of Brent North Sea crude for September delivery shot 
up to its new peak at 3.05am (AEST). About an hour later, it was trading at 
$US78.32 a barrel, up $US2.15 from Saturday's settlement.

New York's main contract, light sweet crude for delivery in September, was 
up $US2.24 at $US77.00.

Both world markets have been surging since mid-July, when violence erupted 
between Israel and the Shiite militia Hezbollah in Lebanon.

British energy giant BP said overnight it had started shutting down the 
Prudhoe Bay oil field in Alaska after discovering severe corrosion on a 
pipeline and a small spill. 

The US Department of Energy (DoE) said it would be receptive to any 
requests from refiners to tap into the nation's emergency oil reserve, amid 
fears the incident could cut daily US oil output by as much as 8 per cent.

Alaron Trading analyst Phil Flynn said: "I am beginning to think BP stands 
for big problems. Better hang on to your hat, as a BP pipeline leak in 
Alaska could spell big problems for the world oil market." 

The shutdown in Alaska will slash BP's US production by 400,000 barrels per 
day (bpd), no mean amount at a time of global tensions and tight supplies.

Barclays Capital analyst Kevin Norrish said: "The reason for the move up in 
price is ... announcement by BP that it is shutting down part of its 
Prudhoe Bay field in Alaska, the largest in the US," 

"Tensions surrounding the Middle East situation have also worsened over the 
weekend." 

Prudhoe Bay accounts for about half of Alaska's total output and around 
eight per cent of total production in the United States, according to the 
DoE.

Analysts said the shutdown came at a bad time for the oil market, with 
prices already being pushed higher by the Israeli offensive against 
Hezbollah militants and threats to Nigeria's oil industry.

The nuclear energy crisis in Iran, the world's fourth-biggest crude 
producer, was adding further upward pressure to prices.