Oil near $50 ahead of U.S. data
 |  Instability in Nigeria, the fifth largest OPEC producer, has pushed oil to $50 a barrel. |
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|  VIDEO |
 CNN's Andrew Carey reports on what is causing the oil price spike.
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| FACT BOX | NET OIL EXPORTERS
(millions of barrels per day, 2003)
1. Saudi Arabia 8.38
2. Russia 5.81
3. Norway 3.02
4. Iran 2.48
5. UAE 2.29
6. Venezuela 2.23
Source: U.S. Department of Energy June 2004
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LONDON, England -- Oil prices are hovering just below $50 a barrel after breaking above that historic level on concerns over tight global supplies.
U.S. light crude slipped 26 cents to $49.64 a barrel early Wednesday in New York after surging to a record high of $50.47 the previous day.
In London, Brent crude stepped back 37 cents to $46.08 a barrel.
Crude remained strong even as Saudi Arabia vowed to boost production capacity and fears of civil war in oil-rich Nigeria eased on reports of a meeting between the country's president and a rebel leader. (Full story)
Adding uncertainty to the market are expectation that U.S. government figures to be released later Wednesday will show crude inventories falling for the ninth straight week after Hurricane Ivan hit operations.
On Tuesday, top OPEC exporter Saudi Arabia announced it would boost its official production capacity by 500,000 barrels a day to 11 million.
The new capacity is not expected to make any immediate impact on actual production with Riyadh already having said it would meet demand for 9.5 million bpd this month and next.
Oil now costs around 75 percent more than it did a year ago. However, when adjusted for inflation, current prices are still about $30 below the level reached in 1981.
This year's surge in prices has resulted in "a major redistribution of income from oil consumers to oil producers" and has been a drag on the economy, according to Nigel Gault, an economist at Global Insight.
Prices jumped this week as Nigerian rebels push for political reforms in the oil-rich African nation. They are vowing to start an "all-out war" against the government from the end of this week. (Full story)
Oil rich but still poor
Nigeria is OPEC's fifth-largest producer, pumping 2.3 million barrels of oil a day. But despite its oil riches, about 70 percent of its people live in poverty.
Rebels battling the government of President Olusegun Obasanjo have warned oil companies to shut production by this Friday, October 1, and have told overseas workers to leave.
Royal Dutch/Shell has already closed one small well producing 30,000 barrels a day and has evacuated some staff as a security precaution.
On Tuesday, a Shell official said the group saw no reason to discontinue oil operations in Nigeria's delta. (Full story)
The rebels, who want political reforms, claim overseas oil companies are collaborating with the Nigerian government in acts of genocide.
'Knife's edge'
Concerns over Nigeria builds on worries about supplies from Russia, Saudi Arabia and Iraq.
Global supplies are straining to meet the fastest growth in oil demand in 24 years. World crude output is close to its limit with only top exporter Saudi Arabia holding any significant spare capacity.
Nigeria's Presidential Adviser on Petroleum Edmund Daukoru told Reuters that production was reduced 10 percent to base capacity of 2.25 million bpd in August. Nigeria had been pumping at surge capacity of up to 2.55 million bpd.
Uncertainty over supplies from Yukos, Russia's top exporter, also is supporting prices. Yukos last week trimmed deliveries to China.
In Saudi Arabia, clashes between security forces and suspected al Qaeda followers served as a reminder of the threat to stability in the world's biggest producer.
Iraqi pipelines have been the target of frequent sabotage attacks. But on Monday deliveries resumed at about 450,000 bpd through the main northern line to Turkey after engineers completed repairs from a bomb attack September 2. Southern exports were near full capacity at two million bpd.
OPEC president Purnomo Yusgiantoro said the cartel was supplying enough crude and was not to blame for high prices.
"This is because of Hurricane Ivan and some problems in other places," said Purnomo of high prices. "This is not a supply and demand problem. OPEC supply is enough," he told reporters in Jakarta.
When Ivan hit the United States earlier this month it damaged petroleum facilities, led to the evacuation of platforms and delayed oil shipments.
Copyright 2004 CNN. All rights reserved.This material may not be published, broadcast, rewritten, or redistributed.
Associated Press contributed to this report.
