Oil prices rose to an 11-month high above $76 a barrel on Monday as rising global oil demand and North Sea field maintenance exacerbated supply worries. London Brent crude, currently seen as a better indicator of the global market, climbed to an intraday high of $76.34 a barrel, the highest level since August 2006.
The all-time record high for Brent is $78.65, reached on August 8, 2006. "The oil price is at very high levels for good reasons and there's every possibility we could see further strength in coming months," said David Dugdale, an analyst at MFC Global Investment Management.
"With Opec continuing to withhold oil from the market the general picture remains one of tightness, with kidnappings in Nigeria, the upcoming hurricane season and ongoing geopolitical concerns all adding to uncertainty over the summer."
By 1533 GMT, the August delivery contract for Brent crude traded 38 cents higher at $76 a barrel. US crude fell 44 cents to $72.37 a barrel. The International Energy Agency, adviser to 26 industrialised countries, said world oil demand would rise faster than expected to 2012 while supply lags. "Despite four years of high oil prices, this report sees increasing market tightness beyond 2010," the IEA said in its medium-term oil market report.
But Opec ministers disagree, saying refinery bottlenecks and geopolitical tensions are to blame for high oil prices this year, not supply shortages. Algeria's Energy and Mines Minister Chakib Khelil told Reuters there was "not much" Opec could do to bring down prices as global crude oil stocks were already sufficient.
"There is plenty of stocks. It's a problem with capacity and refining," Khelil said ahead of a gas pipeline conference in Brussels. "Even if it (Opec) increases production, it's just going to increase stocks and not have any effect because prices are drawn by petroleum product prices."
Expectations that summer maintenance will reduce supplies of crude from North Sea oilfields have also helped boost prices, widening Brent crude's premium to the US grade and putting second-month September Brent at a premium to other contracts.
Two North Sea oil platforms linked to the key Forties crude stream will undergo scheduled maintenance for 16 days in August, prompting the deferrment of 320,000 barrels, energy producer Apache Corp said.
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