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| Oil hits record on supply fears | Oil hits record on supply fears |
| (19 minutes later) | |
| Oil prices have risen above $80 a barrel for the first time, a day after Opec moved to boost its output of crude in an effort to ease cost pressures. | Oil prices have risen above $80 a barrel for the first time, a day after Opec moved to boost its output of crude in an effort to ease cost pressures. |
| US light, sweet crude surpassed the landmark level in afternoon trading before easing slightly to $79.71. | US light, sweet crude surpassed the landmark level in afternoon trading before easing slightly to $79.71. |
| Opec members said they would raise production by 500,000 barrels a day but some analysts have said the move is little more than a token gesture. | Opec members said they would raise production by 500,000 barrels a day but some analysts have said the move is little more than a token gesture. |
| Figures also showed a sharp decrease in US crude stockpiles last week. | Figures also showed a sharp decrease in US crude stockpiles last week. |
| Market speculation | Market speculation |
| Analysts have warned prices could go even higher, even if supplies are boosted. | Analysts have warned prices could go even higher, even if supplies are boosted. |
| As well as increasing global demand, many investors are speculating that oil prices will keep rising and buying the commodity. | As well as increasing global demand, many investors are speculating that oil prices will keep rising and buying the commodity. |
| This is a market that wants to run up on the slightest bit of information Jim Ritterbusch, Rittersbusch & Associates | |
| That in itself is pushing prices higher, analysts said. | That in itself is pushing prices higher, analysts said. |
| "The Opec outcome was not enough of a shocker to turn around a market that likes to read extremes," said Olivier Jakob, from oil consultancy Petromatrix. | "The Opec outcome was not enough of a shocker to turn around a market that likes to read extremes," said Olivier Jakob, from oil consultancy Petromatrix. |
| US crude had settled at a record closing price of $78.23 on Tuesday and soon moved past the previous record high of $78.77. | US crude had settled at a record closing price of $78.23 on Tuesday and soon moved past the previous record high of $78.77. |
| London Brent crude, meanwhile, hit a high of $77.93 before easing to $77.71. | London Brent crude, meanwhile, hit a high of $77.93 before easing to $77.71. |
| Adjusted for inflation, current oil prices still remain below highs seen in 1980. | |
| Falling US stocks are behind the latest price spike | |
| The fresh price spike was triggered by data showing US stockpiles fell to their lowest level in eight months. | |
| Supplies decreased by 7.1 million barrels last week, according to the U.S. Energy Information Administration, a much larger fall than had been anticipated. | Supplies decreased by 7.1 million barrels last week, according to the U.S. Energy Information Administration, a much larger fall than had been anticipated. |
| This bolstered concerns of supply pressures over the winter months. | This bolstered concerns of supply pressures over the winter months. |
| "This is a market that wants to run up on the slightest bit of information," Jim Ritterbusch, president of oil analysts Ritterbusch & Associates, said. | "This is a market that wants to run up on the slightest bit of information," Jim Ritterbusch, president of oil analysts Ritterbusch & Associates, said. |
| Opec move | Opec move |
| The 12-nation oil producers' cartel, Opec, initially seemed reluctant to increase its output despite warnings from the International Energy Agency that additional supplies were needed to meet demand. | The 12-nation oil producers' cartel, Opec, initially seemed reluctant to increase its output despite warnings from the International Energy Agency that additional supplies were needed to meet demand. |
| But pressure from several influential members such as Saudi Arabia, who were concerned that high prices would hurt demand for oil, eventually overcame opposition from others. | But pressure from several influential members such as Saudi Arabia, who were concerned that high prices would hurt demand for oil, eventually overcame opposition from others. |
| It had been expected that Opec's move would eventually depress prices and that this could help ease recent US economic and global stock market jitters. | It had been expected that Opec's move would eventually depress prices and that this could help ease recent US economic and global stock market jitters. |
| But there are also concerns that the market could be oversupplied should any weakening of the US economy reduce demand for oil. | But there are also concerns that the market could be oversupplied should any weakening of the US economy reduce demand for oil. |
| Opec, which supplies more than a third of the world's oil, is already exceeding its set daily quotas by 900,000 barrels. | Opec, which supplies more than a third of the world's oil, is already exceeding its set daily quotas by 900,000 barrels. |