Oil prices ease from record levels
Crude prices have climbed 40 percent this year.
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(CNN) -- Oil prices have slipped back after surging to record highs above $62 a barrel on concerns over Saudi Arabian supplies following the death of King Fahd.
U.S. light sweet crude for September delivery was trading at $61.75 barrel, within reach of the peak of $62.30 scaled a day earlier.
London Brent crude lost 4 cents to $60.40 a barrel after also hitting a record high of $60.98 on Monday.
The initial rise came as traders pondered the likely impact of the death of Saudi Arabia's King Fahd and outages at several refineries in the United States.
Crude prices have climbed 40 percent this year as the Organization of Petroleum Exporting Countries is producing at 25-year highs to meet demand.
Saudi Arabia holds a quarter of the world's known oil supplies and is the world's top exporter.
The Saudi government has moved quickly to stem fears about supply uncertainty in the wake of King Fahd's death.
"I would like to reassure you of our government's pledge to continue King Fahd's legacy of providing the world with a stable and secure source of energy," Rihab Massoud, the Saudi charge d'affaires in Washington, told reporters.
King Fahd died Monday and will be succeeded by Crown Prince Abdullah, his half-brother, who has been the de facto ruler of Saudi Arabia since Fahd suffered a stroke in 1995. (Leaders gather for Fahd funeral)
Abdullah will adhere to Saudi Arabia's long-standing oil policy aimed at ensuring that global markets are well supplied, the kingdom's next U.S. ambassador, Prince Turki al-Faisal, said.
Saudi Arabia pumps about 9.5 million barrels per day (bpd) of crude and has vowed to keep spare production capacity of 1.5 million to 2.0 million bpd to meet any supply shortfalls.
But analysts said markets were jittery over longer-term Saudi policy, noting that the new king and crown prince were both octogenarians.
"It's all part of the whole picture that's been going on for over a year and a half already," said Thomas Bentz, senior energy analyst at BNP Paribas Commodity Futures.
A spate of refinery problems in the U.S. also resurrected concerns about meeting strong fuel demand.
Exxon Mobil added to the weekend anxiety as it shut down its 235,000 barrels per day Joliet refinery in Illinois, according to trade sources.
BP also shut down a gasoline-producing unit over the weekend at its giant Texas City refinery -- the third-largest in the United States and source of 3 percent of its gasoline -- for maintenance, a regulatory filing showed.
"Anytime we have refinery issues, the market just takes off again. We're back in the uptrend," Bentz said.
Although stockpiles of most fuels are relatively healthy for this time of year, traders fear refiners may be hard-pressed to satisfy rising summer motor fuel consumption while also stocking up enough distillate supplies to meet peak winter consumption.
Iran -- OPEC's second largest oil producer -- also rattled the market by saying it had restarted a nuclear facility that the West suspects could help it build a nuclear bomb.
The move was in defiance of European Union warnings and could lead to Iran's case being sent to the United Nations Security Council for possible sanctions.
But in China, the world's second-largest oil consumer behind the United States, demand for crude oil is growing at a slower rate this year, according to a new government survey.
China's commerce ministry said demand will rise about 6 percent from last year to 310 million tonnes (6.2 million barrels per day) in 2005.
A rapid buildup in Chinese demand last year underpinned a surge in global oil prices to above $50 a barrel for the first time. But the pace of growth has slowed, despite Chinese GDP growth of 9.5 percent so far this year.
Last month, the International Energy Agency last month lowered its forecast for Chinese consumption growth this year to 5.5 percent or 360,000 bpd, well below 15.4 percent in 2004.
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