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Last Updated: Monday, 25 October, 2004, 21:11 GMT 22:11 UK
Oil prices dip as strike averted
Norwegian oil rig
Employers said the lock-out would bring oil production to a halt
Oil prices have fallen back from fresh highs after the Norwegian government ordered an end to a shipping dispute which could have disrupted supplies.

New York light crude touched $55.53 a barrel, but ended the day at $54.54, down 96 cents on Friday's record close.

Norwegian ship owners had threatened to suspend oil shipments in an effort to end industrial action by rig workers.

Norway, the world's third biggest oil exporter, depends on the industry for a large chunk of its revenues.

Norges Rederiforbund, a Norwegian ship owners association, had threatened to lock out workers from its fleet of offshore service vessels and loading installations in a countermove to a four month dispute with rig workers.

Standstill threat

The Norwegian government ordered striking staff back to work on Monday afternoon, saying it would impose mediation to end the dispute.

The government has a history of intervening in labour disputes that threaten oil and gas production.

In June, ministers invoked emergency legislation to end a separate dispute by platform workers.

Oil prices have risen steadily in recent days, amid dwindling US heating oil stocks, continuing violence in Iraq, and strong world demand.

In London on Monday, Brent crude rose as high as $51.70, before easing to $50.78, a drop of 44 cents on Friday's record close.

Oil prices have now risen more than $10 a barrel since September.

Prices are about 80% higher than a year ago, but would need to hit $80 a barrel in order to surpass the all-time 1981 record in inflation-adjusted terms.

Disruption fears

Supply worries stem from a dip in output from the Gulf of Mexico, where oil facilities were damaged by Hurricane Ivan in September.

Global oil production is currently running at just 1% above daily oil consumption, leaving little room in the event of supply outages.

Fears that production in Iraq, Venezuela, Nigeria and Russia could be disrupted continue to influence the markets as well.

China's increasing appetite for oil imports has also helped push prices higher.

However, data on Friday showed that economic growth had slowed for a third straight quarter in China as government efforts to rein in the country's economic boom are having an impact.

But at 9.1%, its pace of expansion remains strong, observers say.

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