LONDON – Crude oil futures prices slipped Monday as Norwegian officials ordered striking oil workers back on the job Monday night, preventing any more cuts in production from that important global supplier.
Crude futures for December delivery were down 46 cents at $54.71 a barrel in midday trading on the New York Mercantile Exchange (search) after rising as high as $55.67 in electronic trading. The contract closed at a record $55.17 a barrel on Friday.
In trading on London's International Petroleum Exchange (search), the price of December Brent crude futures were down 37 cents at $50.85 a barrel after rising earlier as high as $51.70.
November heating oil, which had hit a new high of $1.6030 per gallon on Friday, was trading at $1.5760 Monday afternoon in Europe.
Late Monday, the Norweagian government ordered striking oil workers back on the job and the Norwegian Shipowners Association withdrew its threat to lock out more oil and gas rig workers.
Norway produces at least 3 million barrels of crude daily and is a crucial supplier of natural gas and distillate fuel.
Kevin Norrish, oil analyst at Barclays Capital in London, had said earlier that if the labor troubles were to cut off all of Norway's exports, the result would be "pretty serious."
"If it does go ahead, we are into $60 territory without a shadow of a doubt," he said. "The market's going to be very, very nervous about it indeed."
Fears of a cold Northern Hemisphere winter have further stoked the price of crude and heating oil, with dwindling stocks also being reported in Western Europe and Japan.
Demand for jet fuel — kerosene and additives — also typically rises during the Christmas season because of extra flights, adding even more pressure.
But while crude futures prices are more than 80 percent higher than a year ago, they still need to reach $80 per barrel in order to surpass the all-time peak — in inflation-adjusted terms — set in February 1981.
Crude has risen more than $10 in the past month alone, primarily on concerns over production in the Gulf of Mexico, where over 23 million barrels remain shut in since Hurricane Ivan (search) hit mid-September.
Winter woes are taking place against the backdrop of disruptions in production and turmoil in key producers such as Iraq, Venezuela, Nigeria and Russia.
In Russia, cash-squeezed oil giant Yukos lost a key partner at some of its most lucrative fields when services company Schlumberger Ltd. confirmed Monday that it was recalling some of its personnel and drilling equipment from Yukos' key production unit.
Russia's No. 1 oil producer has been fighting since the summer to pay some $7 billion in back tax claims for 2000-2001. The problems have led to fears of production interruptions at Yukos, which pumps 2 percent of the world's oil.
In Iraq, local officials said there have been 250 guerrilla attacks on pipelines and other oil infrastructure, squandering between $7 billion and $12 billion in potential export revenue.
"What Iraq needed to do was rehabilitate the industry, but the focus has been on repairing the damage from sabotage," said Walid Khadduri, an Iraqi who edits Middle East Economic Survey, an oil journal based in Nicosia, Cyprus.
Iraq's Oil Minister Thamer Al-Ghadhban estimated emergency repairs and lost revenue had cost the country $7 billion since exports resumed after the invasion.
Analysts and traders said they also were on the lookout for increasing demand from China, which released third-quarter economic growth figures Friday showing gross domestic product climbing 9.1 percent on year and 9.5 percent for the first 3 quarters of 2004.
"China, that's the bullish factor, but immediately there is concern over the lockout in Norway adding to the Chinese (economic) reports. There doesn't seem to be any end to price rises," said Esa Ramasamy, oil editorial manager for energy reporting agency Platts.
China is the world's second-largest consumer of crude after the United States, and consumes more than 6 million barrels per day, the Paris-based International Energy Agency said in its latest report. There are no signs that demand from Beijing will decrease in 2005, the agency said.