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Last Updated: Tuesday, 9 August 2005, 19:47 GMT 20:47 UK
Oil prices fall back from highs
Remains of a oil pipeline in eastern India
A major oil pipeline in eastern India was attacked by rebel groups
Oil prices fell back from record highs on Tuesday as dealers locked in profits, but prices are likely to rise again on security and supply concerns.

The price of a barrel of US light crude, which had climbed above $64, ended the day down 87 cents to $63.07.

In London, Brent crude finished down 72 cents to $61.98 a barrel.

The recent price surge has been driven by fears over whether output can meet demand in the face of refinery closures and instability in the Middle East.

Analysts said they expected prices to rise further in the coming days.

Petrol fears

Prices have advanced well beyond $60 a barrel in the past week following the death of King Fahd of Saudi Arabia and the news that Iran would resume uranium processing.

The two-day closure of US diplomatic buildings in Saudi Arabia, in light of an alleged security threat, and attacks by rebels in eastern India on a key pipeline have also kept the market on edge.

The rising price was also underpinned by continuing problems for US refineries, sparking fears of a petrol shortage.

We have just got a continuation of an upward trend
Tom Bentz, BNP Commodity Futures

Two facilities - one in Texas and another in Pennsylvania - faced shutdowns following fires and repair work, taking the total number of refineries where problems have been reported to nine in the past two weeks.

Production limits

Oil producers body, Opec, has acted to try and cool prices by raising output by 300,000 barrels a day over the last two weeks.

However, analysts said that this was likely to have little impact amid continuing geopolitical worries and feverish demand for oil worldwide.

Analysts estimate that only 1.5 million barrels of spare production capacity remain in the global oil market, leaving the market less flexibility to respond to sudden supply needs.

"We have just got a continuation of an upward trend," said Tom Bentz, an oil analyst with BNP Commodity Futures.

"There is no sign that it will be stopping any time soon."

Hear why petrol prices could rise even further

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