updated 7/29/2004 7:22:48 PM ET 2004-07-29T23:22:48

Oil prices eased Thursday but remained above $42 a barrel, a day after hitting a 21-year high in U.S. trading because of a threat by Russian authorities to shut down most of the production from that country’s largest oil company.

Russia’s Justice Ministry said Thursday it had lifted a freeze affecting three subsidiaries of the Yukos oil company. Yukos, which produces 2 percent of the world’s oil, had said those orders could shut off the production flow within days.

U.S. light crude fell 15 cents to settle at $42.75 a barrel Thursday on the New York Mercantile Exchange, easing off Wednesday’s 3 percent spike for the September contract to an intraday high of $43.05 a barrel — the highest level since the Nymex began offering the light, sweet crude contract in 1983.

In London, contracts of Brent crude for September delivery fell 28 cents to close at $39.25 Thursday on the International Petroleum Exchange, down from Wednesday’s high of $39.68 a barrel. That had beaten the previous all-time high of $39.65 on Oct. 12, 1990, when Iraqi troops invaded Kuwait.

While prices have eased a bit from Wednesday’s spike, analysts said the market could remain volatile as long as the Yukos standoff with Russian authorities over an overdue multibillion dollar back tax bill.

“I’m still noting a bit of skepticism in the market right now,” said Phil Flynn, an analyst at Alaron Trading Corp. in Chicago, noting that Justice Ministry decision does not guarantee that oil will continue to pump in the future. “The market is finally catching up with reality of Yukos situation. We were hoping it would go away quietly.”

The company says it does not have the cash to pay its $3.4 billion tax debt, and court orders have frozen assets that it could tap to raise money. Yukos officials repeatedly have warned that the company is being driven toward bankruptcy.

The uncertainty surrounding Yukos’ production comes as crude supplies are already extremely tight, with Iraq’s output hampered by saboteurs and most producers already pumping as much as they can. Saudi Arabia, the only producer that still has significant spare capacity, has recently boosted its production by about 1 million barrels, but much of this fresh oil has yet to reach customers and replenish their depleted inventories.

Analysts said oil prices might jump to $45, or even $50 a barrel, over the next several months before dropping back significantly.

“We’re certainly in a long-term bull market for crude oil,” said Tom Kloza, director of Oil Price Information Service, a Lakewood, N.J., provider of industry data oil pricing information service. He predicted jet fuel, heating oil, diesel and kerosene prices will be affected more than gasoline and other consumer products.

However, gasoline prices will likely remain high for a while, Kloza said.

“The one thing you can bet on is that the cyclical factors that sent gas prices up in 2004 will come back in early 2005,” Kloza said. “Now the lowest (gasoline) prices will be, interestingly, right around election day.”

The average retail price of gasoline declined slightly last week, falling to nearly $1.91 per gallon, after rising during the two previous weeks, the Energy Department reported Monday. Gas prices peaked at $2.06 a gallon in late May.

© 2012 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

Discuss:

Discussion comments

,

Data: Latest rates in the US

Home equity rates View rates in your area
Home equity type Today +/- Chart
$30K HELOC FICO 3.79%
$30K home equity loan FICO 4.99%
$75K home equity loan FICO 4.69%
Credit card rates View more rates
Card type Today +/- Last Week
Low Interest Cards 13.83%
13.79%
Cash Back Cards 17.80%
17.78%
Rewards Cards 17.18%
17.17%
Source: Bankrate.com