High-flying oil prices paused in their ascent today as the US government considered whether to loan out crude from its strategic petroleum reserve (SPR) after Hurricane Ivan sliced into supplies.
US light crude dipped 33 cents to $48.02 a barrel after rising more than $1 yesterday following an eighth straight weekly fall in US inventories. US prices are within $1.50 of the August 20th all-time high of $49.40.
London's Brent crude, which matched its $45.15 record high today, slipped 21 cents to $44.72 a barrel.
Prices fell after a US government source said two US refiners had requested loans of crude oil from the emergency reserve after Hurricane Ivan disrupted US offshore production and slowed oil imports.
"The stocks are for emergency use and that's what we have now," said a broker based in New York. The US government source said officials were reviewing the requests, one for 100,000 to 200,000 barrels and the other for 1 million to 2 million barrels.
The last time Washington loaned oil from the SPR was in late 2002 when Hurricane Lili disrupted shipments into Gulf Coast distribution hubs. The White House has said it would not withdraw oil from the 670 million barrels reserve, held in underground salt caverns at four sites in Louisiana and Texas, except for a severe supply disruption.
The Energy Information Administration (EIA) also reported declines in oil products' tanks, with distillates falling 1.5 million barrels and key heating oil down by 1 million barrels.
Heating oil stocks normally build at this time of year ahead of the northern hemisphere winter. New York heating oil futures have hit record highs. "
There are also concerns of further supply disruptions from Yukos, Russia's biggest oil exporter, which is battling bankruptcy from multi-billion-dollar tax debts.
Global supplies are straining to meet the fastest growth in oil demand in 24 years. World crude production is close to its limits with only top exporter, Saudi Arabia, holding any significant spare capacity of about 1 million bpd.