NEW YORK – Oil prices pulled back from fresh 21-year highs on Wednesday after weekly U.S. government data showed oil product supplies jumped and beleaguered Russian oil giant Yukos assured it would be free to use its bank accounts to keep exports flowing.
U.S. crude fell $1.00 at $43.15 a barrel, after earlier striking $44.30, the highest since oil futures were launched on the New York Mercantile Exchange (search) in 1983.
Brent crude fell 44 cents to $40.20 a barrel, easing from a record high earlier of $40.99. That was the highest level since London's International Petroleum Exchange (search) launched trading in Brent futures in 1988.
Oil prices have risen by more than one-third since the end of 2003 on worries that accelerating global demand has left supplies tightly stretched with little leeway for disruption.
In recent weeks oil prices have also been rallying as the Kremlin has demanded billions of dollars of taxes for 2000 from Yukos, the country's largest oil exporter.
But Yukos on Wednesday said bailiffs had informed them that it could use its bank accounts to finance core operations, a move to alleviate fears over possible disruptions to the company's exports.
In its weekly data, the Energy Information Agency (search) said gasoline stocks rose 2.4 million barrels last week to 210.1 million barrels. Analysts had expected stocks to fall 600,000 barrels due to peak summer demand from vacation drivers.
U.S. distillate stocks rose 2.1 million barrels, above analysts' expectations for a rise of 1.4 million barrels.
Gasoline demand over the past four weeks was down 0.3 percent on the year, a reversal of strong demand growth that took U.S. gasoline futures to record highs in May and helped push crude prices higher.
"It's a bad report for products," said Kyle Cooper, analyst at Citigroup Global Markets. "We now are 8.3 million barrels above last year in terms of gasoline, and yet we are 50 percent higher in terms of price. I'd like someone to explain that to me."
U.S. gasoline futures fell 3.36 cents or 2.6 percent to $1.2530 a gallon.
"The oil price is of course a concern," said Germany's Finance Minister Hans Eichel. "It could slow economic growth."
Allowing for inflation, prices are near the level hit during the 1973 oil embargo and just over half those during the oil price shock that followed the 1979 Iranian revolution.
Some wider impact has already been felt. U.S. consumer spending in June fell at the fastest rate since September 2001, according to U.S. government data released on Tuesday. High oil prices contributed to the fall as consumers cut back on new vehicle purchases.
U.S. shares slid on Wednesday, extending the previous day's losses on investor fears that oil prices will hurt corporate profits.
However, the evidence of further damage to world economies remains patchy. U.S. consumer confidence climbed last week, and figures from U.S. automakers show vehicle sales in the world's largest energy consumer registered robust gains in July.
But analysts warned that rising prices are set to damage expanding economies which rely on oil imports, such as India, Asia's fourth-largest economy, which imports 70 percent of its crude oil requirements.
Oil's latest boost was triggered on Tuesday when the head of the OPEC (search) producers' cartel said there was no spare oil immediately available to cool red-hot prices.
OPEC President Purnomo Yusgiantoro said that Saudi Arabia, the world's biggest exporter, had spare production capacity but could not raise output immediately.
"The oil price is very high, it's crazy. There is no additional supply," Purnomo told reporters in Jakarta.