Price of a barrel of crude tops $54, shatters record

Oil prices are about 80 percent higher than they were a year ago.
SINGAPORE (AP) -- Crude oil prices breached the $54 mark today to reach a new high, fueled by continuing worries over supply in Nigeria and reduced output in the hurricane-hobbled Gulf of Mexico.
Traders were also concerned over troubled Russian oil giant Yukos, which has been hit with a fresh tax bill that could derail output amid fears that supplies from Brazil and Iraq might also be disrupted.
Crude for November delivery on the New York Mercantile Exchange reached a new high of $54.14, after settling overnight at $53.64.
Monday's close was the fifth straight day of record settlements on the Nymex for November crude.
While oil prices are about 80 percent higher than a year ago, they are more than $26 below the peak inflation-adjusted price reached in 1981. Underlying daily jitters is that excess available output is scant, with global production capacity only about 1 percent above the daily supply of 82 million barrels.
"It would be imprudent for the public to expect that all this would be resolved anytime soon. We have to adopt a mentality that we have to live with these prices," said John Vautrain, vice president of Texas-headquartered energy consultants Purvin & amp; Gertz in Singapore.
Strike
In Nigeria, a nationwide strike to protest higher fuel prices began Monday, shutting down most of Lagos, Nigeria's commercial capital. The country's output of 2.5 million barrels per day has not been affected yet but traders remained concerned.
Nigeria produces low-sulfur crude -- currently in high demand -- and analysts said the prospect of losing output there is particularly worrisome.
The four-day strike takes place just after a militia group and the government reached a tentative peace deal.
Previous efforts by the Organization of Petroleum Exporting Countries, which already produces close to 30 million barrels daily, to boost output have involved crude with a high-sulfur content, which is less desirable for refiners.
"OPEC as a whole has seen production capacity dropping by nearly one-quarter in the past two decades," said Morgan Stanley chief Asia economist Andy Xie in his latest research report.
The market is also closely monitoring the slow recovery of production in the Gulf of Mexico, where 17 million barrels of oil production have been lost since Hurricane Ivan whipped through the region in mid-September.
Copyright 2004 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.