August 09, 2006	Wednesday	Rajab 13, 1427

LONDON, Aug 8: World oil prices eased on Tuesday, but held close to a recent record in London as a pipeline leak forced British major BP to shut the biggest oil field in the United States and US authorities mulled releasing emergency stockpiles.

Brent North Sea crude for September delivery eased 51 cents to $77.79 per barrel in electronic deals, off its new peak of $78.64 set on Monday.

New York’s main contract, light sweet crude for delivery in September, dropped 53 cents to $76.45 per barrel in pit trading.

The contract remained below its historic record of $78.40 per barrel reached in mid-July as violence escalated between Israel and Hezbollah in Lebanon.

Crude futures, which are winning support also from disruption to supplies in Nigeria, the ongoing Iranian nuclear energy crisis and strong demand, surged on Monday after BP announced the shutdown of its Prudhoe Bay oilfield.

BP scrambled on Tuesday to ease the crisis over an oil spill at its Alaska operations caused by corrosion, saying it would replace all main pipelines, halting production indefinitely.

According to Man Financial analyst Robert Laughlin, oil prices were capped by “the fact that BP is taking the sensible option, which is to replace the whole 22 miles of pipeline that is affected”.

He added: “Even if it’s still going to take some months, it will be easier and quicker to replace it completely than it was to go back and repair it.”

Laughlin added that “it is going to be some long time” before BP can resume full production at Prudhoe Bay.

Prudhoe Bay is the biggest field in the United States but the spill was tiny, amounting to four to five barrels, BP said. However, the company’s main concern was the discovery of evidence of “unexpectedly severe” corrosion.

The oilfield’s shutdown, which could reduce US oil output by 8.0 per cent, prompted the US administration to signal that it might allow refiners to draw on emergency oil stocks.

US West Coast refineries depend on Prudhoe Bay for crude which are transported through pipelines.—AFP