NEW YORK, Sept 23 (AFP) - Oil prices edged closer to record territory Thursday as markets shrugged off news that the US government may draw from its strategic reserves to make up for shortages due to Hurricane Ivan.
New York's main contract, light sweet crude for delivery in November, reversed course in late trading and gained 11 cents to 48.46 dollars a barrel at the close.
In London, Brent oil futures for November delivery closed at 45.13 dollars, up 20 cents.
With the latest rise, the New York futures price edged closer to the all-time record close on August 19 of 48.70 dollars and the intraday record of 49.40 dollars on August 20.
The White House said discussions were underway about drawing from the Strategic Petrolum Reserve (SPR). Hours later, the Energy Department said it was preparing to release "a limited quantity" of crude oil from the reserve to ease shortages resulting from Hurricane Ivan.
Officials suggested that any drawdown, which would come in response to specific requests from refineries, would be small in comparison to the drawdown of 35 million barrels from US inventories in recent months.
White House spokesman Scott McClellan said, "We've always said that the Strategic Petroleum Reserve was set up to protect against physical disruptions of oil supplies, such as national emergencies or natural disasters, and not to manipulate prices or for political purposes."
Approximately 670 million barrels of oil are currently stored in the reserve, a series of four underground caverns located along the coast of the Gulf of Mexico. The SPR is expected to reach its full capacity, 700 million barrels, in 2005.
Mike Fitzpatrick, an analyst at Fimat USA, said he did not believe the release would ease the current market tensions.
"Once people got a closer look at the headline about the SPR, they realized it doesn't involve many barrels of oil," he said.
"Also, apparently Ivan has split up and is becoming another hurricane and is again threatening the Gulf coast."
Commerzbank analyst David Thomas said any impact on the market would be limited.
"It would be a question of borrowing it and giving it back as soon as supplies arrive towards their storage center," he said.
"But obviously the market would take it nervously because it would be seen as a release of strategic reserves rather than just a borrowing."
"Whether (prices) hit new record highs will very much depend on other factors outside of the US, such as security supply in the Middle East and commentaries out of Russia and Yukos in particular," said Thomas.
Embattled energy giant Yukos "caused a little bit of flurry in oil prices earlier this week when it threatened to cut exports to China. But they seem to have resolved their difficulties for a while," he noted.
Russia promised to sort out Yukos oil deliveries to China on Thursday, as Chinese Premier Wen Jiabao arrived in Moscow for talks dominated by the struggling oil major's decision to cut supplies to the energy-hungry Asian giant.