Focus: As Credit Woes Hit Main St, Oil Bulls Unmoved…for Now

LONDON – A run by depositors on one of Britain’s largest mortgage lenders has stoked fears of a broader economic slowdown but so far there is little to indicate that will hamper surging oil prices, which climbed to a new record Tuesday.

Oil exporting nations, government officials and traders have closely watched for signs in recent weeks of whether a global credit crunch initiated by the U.S. sub-prime housing crisis could spread, depressing economic activity and the demand for oil.
“There is no question that there is turbulence in the financial markets at the moment. But I’m not convinced that this will have a huge knock-on effect,” said Carl Hughes, U.K. head of energy at Deloitte.

Analysts say there are too many factors driving oil prices up in the near-term: Low crude inventory levels in the U.S., hurricanes that could knock out further refining capacity, and growing tightness in supplies as the world’s largest oil consumers head into winter.

Mike Wittner, oil analyst at SG Securities, said the oil market is shrugging off any possible signs of macroeconomic weakness as demand remains strong.

“There are factors on both sides, and right now the more bullish short-term factors are winning out,” said Wittner.

“Prices are being propped up by immediate supply threats,” he added.

Schlumberger