ASIA Crude oil sets new record by topping $50 a barrel

Traders expect oil prices to continue to rise.
SINGAPORE (AP) -- Crude oil topped $50 per barrel during Asian trading today, pushing past the psychological milestone for the first time then surging further to new record levels likely to unsettle oil-consuming nations.
Traders bid oil to new highs in after-hours trading on the New York Mercantile Exchange in a reaction to the slow recovery of U.S. oil production that was damaged by Hurricane Ivan and unrest in key producers Saudi Arabia, Iraq and Nigeria.
After reaching $50, prices inched higher. By mid-afternoon in Asia, light sweet crude oil for delivery in November traded at $50.47 per barrel, up 83 cents from the close of Monday's regular session in New York.
Higher production
In reaction to these prices, Saudi Arabia, the world's largest oil exporter, will raise production from 9.5 million barrels a day to 11 million barrels, an Oil Ministry official said this morning.
The increase would go into effect within weeks, according to the senior official, who spoke on condition of anonymity. No further details were provided.
ANZ Bank energy analyst Daniel Hynes from Melbourne, Australia, said the latest push in prices came from fighting in Nigeria.
"But Ivan certainly paved the way for the latest surge."
Rebels in Nigeria continue to battle for control over the vast southern oil fields in the world's seventh-largest exporter.
U.S. production
The United States has lost more than 11 million barrels of oil production in the past two weeks, according to U.S. government data, with Gulf of Mexico output still down nearly 500,000 barrels a day after the devastation brought by Ivan.
The price of oil is up roughly 75 percent from a year ago and some analysts predict the latest surge -- which is already hurting airlines and other big consumers -- could lead to a global recession.
Although oil is at an all-time high, prices are not at record levels when inflation is taken into account. Adjusting for inflation, today's prices are still more than $30 below the level reached in 1981 after the Iranian revolution.
Fearful users
That hasn't eased the fears gripping the market, however.
"There is a lot of fundamental, panic buying by the end users," said oil strategist Ng Weng Hoong at Energyasia.com in Singapore, adding that he believed the price would go still higher. "When they cracked $50, now there is a trigger for $60. It broke the barrier, it's going to reach the next target," he said.
With global oil demand at roughly 82 million barrels a day, analysts say the amount of excess oil production available is only about 1 percent, leaving the industry a slim margin for error in the event of a prolonged supply interruption.
On Monday, the U.S. Minerals Management Service reported that daily oil production in the Gulf of Mexico is 29 percent below normal at about 1.2 million barrels per day.