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Brent oil smashes through 70 dollars
AFP
NEW YORK
Petroleumworld.com 04 14 06The price of Brent North Sea crude oil broke through 70 dollars a barrel for the first time on Thursday, fuelled by growing tensions over Iran's nuclear ambitions.
In London, Brent crude for June delivery jumped 71 cents to finish the day at 70.57 dollars a barrel, off an all-time high reached earlier of 70.72 dollars.
New York's main contract, light sweet crude for delivery in May, closed up 70 cents at 69.32 dollars a barrel. That was in sight of its record high reached last August of 70.85 dollars.
London's Brent contract has been striking record highs since Monday on market concerns that the United States might launch military strikes at uranium facilities in Iran, the world's fourth-largest producer of crude.
The last time both the London and New York oil markets were this enervated was in late August, after Hurricane Katrina battered oil facilities on the US Gulf Coast.
"It's another milestone," said Barclays Capital analyst Kevin Norrish after Brent surpassed 70 dollars a barrel. "Brent is leading the way at the moment," he said.
Adjusted for inflation, prices remain below levels reached after the 1979 Iranian revolution when they surged to upwards of 80 dollars a barrel in today's money.
Jim Ritterbusch at oil trading firm Ritterbusch and Associates said dealers had covered their positions before the oil market takes a day off Friday for the Easter weekend.
Next week, he said, fears of US shortages of gasoline would make crude futures test new highs as New York's May contract prepares to expire on Thursday.
"I think before it expires next Thursday it will be pulled up by gasoline enough to test its record high of 70.85," he said.
Iran repeated Thursday after talks with Mohamed ElBaradei, the head of the UN atomic watchdog, that it would not bow to demands it freeze uranium enrichment, which the West suspects is intended to build an atomic bomb.
The Islamic republic's top nuclear negotiator, Ali Larijani, told reporters that the UN Security Council's call for Iran to return to a freeze on the sensitive work "was not very important".
But US Secretary of State Condoleezza Rice said the Security Council should consider adopting a resolution against Iran's nuclear programme under chapter seven of the UN charter, which could allow military action.
Iran, the second-biggest member of the Organization of Petroleum Exporting Countries with an output of four million barrels per day, insists its nuclear programme is for peaceful energy purposes.
Norrish added: "The general picture is that the tightening (gasoline) market and geopolitical risks are underpinning further increases in crude oil, despite the very high (US) crude inventory levels."
Prior to Brent's spike, crude futures had traded in negative territory for much of Thursday on profit-taking ahead of the Easter weekend. Oil trading resumes on Monday.
Adding to the Iran tensions, the US Department of Energy had revealed Wednesday that gasoline inventories slumped by 3.9 million barrels to 207.9 million in the week to April 7.
Market watchers said the figures reinforced concerns about gasoline constraints heading into the peak-demand US summer holiday season, beginning late May, when many American drivers take to the roads on vacation.
Brent North Sea, a light, sweet crude oil, is used to price more than 65 percent of the world's traded crude oil supplies, according to London's International Petroleum Exchange.
Although consumers have access to large supplies of heavy, sour crude, refiners prefer light, sweet oil because of its low sulphur content and relatively high yields of gasoline, heating oil, diesel and jet fuel.
AFP 04 13 06 2010 GMTCopyright © 1994-2006 Agence France-Presse. All Rights Reserved.
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