Oil prices fall from record

Oil prices fell yesterday from record peaks after Russia lifted the threat of a halt to oil sales by the country's largest oil firm YUKOS.

US light crude lost 80 cents to $42.10 a barrel after climbing to a peak of $43.05 on Wednesday, the highest in the contract's 21-year history. In London, Brent crude oil fell 83 cents to $38.70 after scaling a 14-year high of $39.68 the day before.

Wednesday's price peaks were driven by a warning from YUKOS that an asset freeze ordered by bailiffs could hit oil sales by its operating companies.

YUKOS produces around 1.7 million barrels per day, almost as much as Iraq is expected to produce next month. "The Ministry of Justice has officially recalled the ban on property alienation it had previously imposed on Yuganskneftegaz, Samaraneftegaz and Tomskneft," YUKOS spokesman Yevgeny Fokin said in an e-mail to reporters.

Analysts said the apparent climbdown by the authorities could offer little respite for YUKOS, which has said it could collapse by mid-August as bailiffs seek to recover a $3.4 billion tax debt for 2000 while its bank accounts and assets are frozen.

YUKOS CEO Steven Theede has said a freeze on bank accounts could soon affect rail shipments of oil, which account for up to a quarter of the company's total sales.

Traders predicted that the market would stay well supported by concerns that world supplies are being dangerously stretched by strong global demand growth and are vulnerable to disruption.

Producers' cartel the Organisation of the Petroleum Exporting Countries is pumping at more than 95 per cent of capacity, the highest for a quarter of a century.

US government data on Wednesday showed record demand for crude oil as refineries pumped at 97 per cent of capacity, absorbing almost all of a record influx of imported crude.