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NEW YORK : World oil prices tore to new all-time highs on a market shocked by Russia's withdrawal of a promised financial lifeline for oil titan Yukos.
New York's benchmark contract, light sweet crude for delivery in September, soared 1.67 dollars to 44.50 dollars a barrel mid-afternoon, smashing the previous record of 44.34 dollars.
It closed at a record settlement of 44.41 dollars.
Brent North Sea crude darted 1.60 dollars higher to an unprecedented 41.30 dollars before settling at 41.12, also a record closing level.
Russia's justice ministry said it had "recalled" an earlier decision allowing Yukos to access its current accounts to keep its operations running while paying a massive tax bill.
"All of the financial resources that have or will continue to enter the company's accounts will be seized or switched (into) the state budget to pay off the tax debt," the ministry said.
The decision quickly reversed a slump of 1.32 dollars on the New York crude oil price the previous day.
"Clearly the stunning reversal of the Russian government's stance on Yukos makes people even more uncertain about supply at a time of very strong demand," said Fimat USA market analyst Mike Fitzpatrick.
"Apparently demand is still strong enough to push prices higher."
He declined to forecast where prices will go on a market awash with speculative money.
Refco market analyst Marshall Steeves said the market could press yet higher.
"The momentum remains bullish despite yesterday's declines," Steeves said.
"It is really a very speculative-led market which I think is going to push on for a little while into the higher 40s probably," he said. "We could go up and perhaps touch 50 dollars."
Boiling oil prices singed the stock market, depressing the blue-chip Dow Jones industrial average by more than 100 points.
Oil traders took little comfort from a statement Wednesday by the Organization of Petroleum Exporting Countries that it had surplus capacity of up to 1.5 million barrels per day (bpd) immediately available.
"OPEC continues to hold, at present, a spare production capacity of around 1.0-1.5 million bpd, which would allow for an immediate additional increase in production," OPEC President Purnomo Yusgiantoro said in a statement.
Many traders reacted with skepticism.
A few days earlier Yusgiantoro had said OPEC was powerless to boost supplies.
In any case, 1.0 million to 1.5 million barrels was hardly a major boost to global supplies, Fitzpatrick said. "It is not going to be a tidal wave of oil coming on to the market, for sure."
Fifty dollars a barrel was now a real possibility, some analysts said.
"Onwards and upwards as oil prices head towards 50 dollars," analysts at Barclays Capital told clients.
"The market continues to be dominated by the potential for a severe supply crunch as global oil demand swings up towards its seasonal peak," they said in a report.
Traders were also keeping a nervous watch on Venezuela ahead of an August 15 referendum on President Hugo Chavez's rule.
Opinion polls generally show Venezuelans would vote for Chavez to serve the remaining two years of his term, but there are fears that unrest and strike action could disrupt the country's oil production.
"The concern over supply disruptions still remains on the forefront of traders' minds," Commerzbank analyst David Thomas said in London.
- AFP
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