Violence in Iraq and demand in China and India spur oil prices

Oil prices blazed above $48 a barrel and set fresh highs Thursday as violence in the Iraqi city of Najaf flared, causing supply shortage worries.

At around 10:20 a.m. ET, light crude for September delivery stood at $48 in electronic trading, just below the intraday record $48.10; crude set a settlement record Wednesday at $47.27. October Brent crude traded at $43.59 in London, up 56 cents, reports CNN.

"The situation in Basra is still deemed too dangerous to operate the (pipe)line, although headquarter employees returned to work today and events in Najaf are encouraging," a South Oil Company official told Reuters Thursday.

Iraq's southern pipeline has been shut since a sabotage attack on Aug. 9, curbing export flows to about a million barrel daily, half normal rates.

Iraq has lost an estimated $2.7 billion in revenue since the U.S. invasion from sabotage attacks against oil export pipelines, the country's Oil Minister Thamir al-Ghadhban told Reuters.

Crude oil futures rose to another record on Wednesday after a report indicated US oil supply was not keeping up with demand for petrol, diesel and heating fuel.

A 9 per cent rise in US oil imports failed to prevent stockpiles declining for the third straight week, the US Energy Department said on Wednesday.

The Organisation of Petroleum Exporting Countries, which pumps more than a third of the world's oil, yesterday raised its fourth-quarter demand forecast and said member countries were producing near their limits.

"OPEC production is at 'max', we've got record imports and we're still getting draws on crude," said Steve Taylor, a trader with New West Petroleum in Sacramento. "There's not a lot that's going to bring this market down."

Crude oil for September delivery rose as much as US23c, or 0.5 per cent, to $US47.50 a barrel in after-hours electronic trading on the New York Mercantile Exchange, the highest price since oil futures began trading in New York in 1983. Oil is up 54 per cent from a year ago, states The Sydney Morning Herald.

Oil prices struck a fresh record on Thursday, spurred higher by renewed violence in Iraq and fresh evidence that strong demand growth in China and India has not been slowed yet by higher energy costs.

U.S. light crude rose 53 cents to $47.80 a barrel, a new record, and London Brent gained 51 cents to $43.54 a barrel. U.S. prices have set record peaks in all but one of the past 15 trading sessions and are up more than $10.50 a barrel, 28 percent, since the end of June.

Attacks by Iraqi rebels saw mortars kill five at a Najaf police station and a domestic oil pipeline in the north blown up. Mortars also hit the Green Zone compound in Baghdad housing Iraq's interim government.

Rising world oil demand has left little slack in the system to cope with outages in Iraq where Shi'ite militia have said they will target oil infrastructure if U.S. forces do not leave the holy city of Najaf, according to Reuters.

Crude oil futures rose to a record for a sixth straight day in New York as fighting in Iraq raised concern about its ability to sustain exports and a report yesterday showed falling oil inventories in the U.S., writes Bloomberg.