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Last Updated: Tuesday, 17 August, 2004, 23:33 GMT 00:33 UK
Crude oil prices set fresh highs
Oil traders, New York
New York oil traders have watched prices surge
Oil prices touched new highs on Tuesday after economic data indicated that rising have yet to slow economic growth or the demand for energy.

US crude hit a new 21 year high of $46.95 a barrel in New York, ending the day up 70 cents at $46.75.

Brent crude settled 30 cents higher at $42.99 in London.

Prices had dipped earlier in the day on reports that Russian oil firm Yukos would be able to maintain oil exports at least until the end of September.

However, later on Tuesday Yukos lost an appeal for more time to pay a $3.4bn tax bill, creating fresh uncertainty about its ability to maintain production.

Prices were also stiffened by economic data published on Tuesday, showing the first decline in US consumer prices in eight months and a fall in energy costs.

The figures, for June, indicated that underlying inflation was in check - and thus that demand for goods and services is likely to remain high.

With global oil production capacity under pressure, oil prices could be pushed even higher, analysts said.

"The latest data implies that demand for oil will continue to be strong because it appears that higher energy prices have had little impact on overall inflation," said Phil Flynn, an analyst with Alaron Trading.

Price pressure

Oil price fears had eased somewhat on Monday after Venezuelan voters backed President Hugo Chavez in a generally peaceful referendum.

"I expect the market to recover slightly from here," a Singapore based trader said.

Oil prices have set a succession of new records in recent weeks, propelled by fears that world oil production is barely keeping pace with strong demand from the US and China.

Concerns over problems in the Middle East and over the future of Russian oil giant Yukos, have also contributed to the oil price rally.

The company, which accounts for about 2% of world oil output, has warned that the tax demand could force it into bankruptcy.

However, company chairman Viktor Gerashchenko told the Reuters news agency that it expects to be able to export through to the end of September at least.

Any news of further supply disruptions in Iraq, which controls the world's second-biggest proven oil reserves after Saudi Arabia, could also push prices higher.

Iraq's oil exports are currently running well below their potential level because of insurgent attacks on pipelines and other oil facilities.

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