By Jason Simpkins
Staff Writer
Oil prices touched another record high Friday, hitting $84.05 per barrel on the New York Mercantile Exchange. The price was spurred on by Thursday's lackluster inventory report, and the prospect of more violence in Northern Iraq.
The U.S. Energy Department reported Thursday that U.S. crude oil inventories declined by 1.67 million barrels to 320.1 million barrels a day the week ended October 5. It was the first decline in three weeks. The EIA also left its demand projections for 2007 and 2008 unchanged, saying worldwide demand would grow by 1.5% in 2007 and 2.4% in 2008.
The renewed threat of violence in Northern Iraq also drove oil prices higher. According to Bloomberg News, Turkish Prime Minister Tayyip Erdogan told reporters in his country that Turkey would pursue the Kurdistan Workers Party (PKK) regardless of diplomatic ramifications. Turkey's government will present a bill to parliament next week authorizing a possible military action inside of Iraq's borders within a year.
PKK rebels recently killed 15 soldiers in Southeastern Turkey, an extremely volatile part of country. Turkey, reportedly, has thousands of troops stationed along the northern border of Iraq, and has been resisting the temptation to cross into the tumultuous country and engage the Kurdish rebels.
"If they start shelling across the border the price is going to go up," Addison Armstrong, director of market research at TFS Energy LLC told Bloomberg. "When there is tension in the world oil gets bid up."
Iraq is currently home to the world's third-largest oil reserves. It produced an estimated 2 million barrels of crude per day in September. Still, further political and economic disruption in the war-torn nation should have a limited effect on the world's oil supply.
"At the end of the day, even if Turkey does cross the border, it's not going to mean anything to the supply of oil," Armstrong said.
News and Related Story Links:
- Money Morning Investment Research:
Oil Prices Slip, but a Rebound Could Be On the Way. - Bloomberg:
Oil Rises to Record on Concern Turkey May Invade Northern Iraq. - CNNMoney:
Oil hits record, pushes past $84 a barrel.