Oil prices fall

[Kool 2k6]

By BRUCE STANLEY

THE ASSOCIATED PRESS


LONDON - Oil prices retreated from record-highs on Friday as concerns about Russian supplies dissipated somewhat and OPEC said it was prepared to raise daily output by more than one million barrels.

A Moscow court ruled that the government acted illegally when it seized shares of a subsidiary of oil giant Yukos, handing the company a significant victory in its battle with the state over alleged back taxes. The outcome of the battle is important to oil markets because Yukos pumps 1.7 million barrels per day, or roughly 2 percent of the world's supply - a critical amount at a time when demand is strong and global inventories are tight.

Light crude for September delivery settled at $43.95 a barrel, down 46 cents from Thursday's record close of $44.41 on the New York Mercantile Exchange. "We are ready to add another 1.5 million barrels a day but will discuss it first during the next meeting in Vienna," Purnomo Yusgiantoro, who is also the Indonesian oil minister, told reporters in Jakarta. OPEC's current output is 30 million barrels a day.

In other Nymex trading on Friday, September gasoline futures fell 0.97 cent to $1.2347 per gallon, while September heating oil futures dropped 1.84 cent to $1.1746 per gallon.

Natural gas for September delivery declined by 12.4 cents to $5.588 per 1,000 cubic feet

Among the powerful psychological factors that have combined to help drive prices higher are uncertainty over crude supplies from the Middle East and fears of terrorism. Crude is now almost 40 percent more expensive than it was a year ago.

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There you go, Dubya. Fear of terrorism....