Oil prices punch through 54 dollars on supply worries

LONDON (AFP) - World oil prices stormed above 54 dollars for the first time as strikes in Nigeria and Norway raised worries about possible supply shortages during the northern hemisphere winter.
But they later retreated on profit taking, traders said.
The price of reference light sweet crude for delivery in November rose to as high as 54.45 dollars a barrel in electronic trading on the New York Mercantile Exchange, the highest in the contract's 21-year history.
US crude futures stood at 53.40 dollars in early deals, a fall of 24 cents from Monday's close.
In London, Brent North Sea crude oil for November delivery soared to a record 51.50 dollars a barrel in early trading, smashing through 51 dollars for the first time in the contract's 16-year history.
Brent futures eased back to 50.44 dollars in late deals, a fall of 22 cents.
"It's just a natural retracement from a very over-bought situation," Prudential Bache trader Tony Machacek said.
"A move back to the downside should not be a big surprise to the market," he added.
Prices earlier rocketed to new high points for the sixth successive session as Nigeria's general strike entered its second day.
"Everybody is worried," said Lee Elliot, a trader with GNI-Man Financial.
"There are great concerns about Nigeria. Though it is not affecting oil at the moment, people think it might. Also there is a strike going on in an oil rig in Norway."
Meanwhile Russia's justice ministry announced plans to sell a part of the Yukos oil giant to cover the company's outstanding back taxes, officials said.
The sale would consist of a part of Yuganskneftegaz, Yukos's largest oil subsidiary which accounts for 62 percent of all of its production, at an undisclosed date, a spokeswoman for the justice ministry said.
Traders were nervous ahead of US petroleum inventory data, to be released Wednesday, following recent supply problems in the Gulf of Mexico caused by Hurricane Ivan which continue to affect output.
With demand in China and the United States racing ahead, markets are jittery about any potential disruptions to supplies, particularly light sweet crude, of which Nigeria is a major producer.
Nigerian unions began a four-day general strike on Monday in protest at rising fuel prices, launching their latest challenge to President Olusegun Obasanjo and his programme of economic reforms.
Nigeria is Africa's largest oil producer, with exports of around 2.5 million barrels per day (bpd), though the country's three biggest producers said there were no reports of disruption to production.
Elsewhere in the African country on Tuesday, a pipeline carrying crude oil across the Niger delta to Nigeria's main export terminal burst into flames, the Anglo-Dutch oil giant Shell said, warning production would be cut during repairs.
In Norway, the world's third biggest exporter of crude, strike action by some 200 off-shore workers that has lasted since the beginning of July was reported to have cut Norway's production by 55,000 bpd, or two percent.
Meanwhile, the Paris-based International Energy Agency lifted its forecast for global oil demand in 2004 but pared its estimate for next year.
In its monthly oil market report for October, the organisation raised its global oil demand forecast for this year to 82.4 million barrels per day from 82.16 million bpd previously due to stronger-than-expected demand from Asia.
But next year it sees global oil demand growth slowing sharply to 1.45 million bpd, or 1.8 percent, from 2.71 million, or 3.4 percent, this year.
Ng Weng Hong, editor of industry publication EnergyAsia.com, said the 55-dollar barrier could be broken in New York sooner than he had expected.
"I thought 55 dollars would come in the next three months, but now it looks like we're short of just one dollar," he said in Singapore.
"Watch out for a bad winter, we're going to have a serious situation."
World oil prices have more than doubled from about 20 dollars a barrel in New York at the start of 2002, surging by about 65 percent since the start of this year.
Adjusted for inflation, however, they remain far below the levels reached in the wake of the 1979 Iranian revolution when prices surged to upwards of 80 dollars a barrel in today's money.