LONDON – Oil prices held near record highs on Thursday as worries lingered over Russian oil production even as Moscow lifted its threat to halt sales from Yukos (search), the country's largest oil firm.
U.S. light crude settled down 15 cents to $42.75 a barrel, within reach of the a peak of $43.05 hit on Wednesday, the highest in the contract's 21-year history on the New York Mercantile Exchange (search). In London, Brent crude oil (search) fell 28 cents to $39.25 after scaling a 14-year high of $39.68 the day before.
Wednesday's price peaks were driven by a warning from Yukos that an asset freeze ordered by bailiffs could hit oil sales by its operating companies. Yukos produces around 1.7 million barrels per day, almost as much as Iraq is expected to produce in August.
"The Ministry of Justice has officially recalled the ban on property alienation it had previously imposed on Yuganskneftegaz, Samaraneftegaz and Tomskneft," Yukos spokesman Yevgeny Fokin said in an e-mail to reporters.
Analysts said the apparent climbdown by the authorities could offer little respite for Yukos, which has said it could collapse by mid-August as bailiffs seek to recover a $3.4 billion tax debt for 2000 while its bank accounts and assets are frozen.
Yukos CEO Steven Theede has said a freeze on bank accounts could soon affect rail shipments of oil, which account for up to a quarter of the company's total sales.
Traders predicted that the market would stay well supported by concerns that world supplies are being dangerously stretched by strong global demand growth and are vulnerable to disruption, even as major producers increase output and stockpiles inflate in consumer countries.
Producer cartel the Organization of the Petroleum Exporting Countries (search) is pumping at more than 95 percent of capacity, the highest for a quarter of a century, in its effort to cool prices.
U.S. government data on Wednesday showed a nationwide increase in oil supplies of 1.2 million barrels last week, bringing them into the average range for this time of the year, with imports hitting a record rate.
"People seem to want to have bullish news. Any bullish straws in the wind are grasped pretty firmly," said Christopher Bellew of Prudential Bache brokerage. "Any fundamental news there is suggesting supplies are adequate tends to be ignored."