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Oil prices higher on news of strong Chinese growth
By Julie Charpentrat
AFP
NEW YORK
Petroleumworld.com 06 16 06
Crude oil prices drifted higher on global markets Thursday amid ongoing supply concerns and prospects of higher Chinese demand for energy, analysts said.
New York's main contract, light sweet crude for delivery in July, climbed 36 cents to close at 69.50 dollars per barrel after briefly topping 70 dollars.
In London, Brent North Sea crude for July delivery gained 45 cents to 67.43 dollars per barrel in closing deals.
Reports of China's strong industrial growth in May boosted expectations that the world's most populous nation may further increase its energy intake to fuel its economic expansion, dealers said.
The National Bureau of Statistics said Wednesday that China's industrial output picked up in May with a year-on-year gain of 17.9 percent, in a further illustration of the Asian nation's stubbornly strong economic momentum.
Phil Flynn at Alaron Trading said the market was driven by "signs we might see another demand surge from China."
This suggests, Flynn said, that "the commodity correction may be over."
"China grew faster than expected ... so this is definitely bullish for prices," said Dariusz Kowalczyk, a Hong Kong-based investment strategist with CFC Seymour.
Kowalczyk said prices were being supported also by a decline in US crude stocks in the United States.
The US Department of Energy (DoE) released its weekly inventory report Wednesday showing a rise in US reserves of gasoline but a dip in crude stocks.
Crude inventories fell 900,000 barrels to 345.7 million barrels in the week to June 9, the DoE added. Analysts had expected a fall of 700,000 barrels.
Meanwhile, traders tracked events in Iran as well as the start of the hurricane season, which last year caused severe damage to US energy installations and led to soaring crude prices.
"The prospect of another active Atlantic hurricane season should mean there is the potential for a sharp spike higher in prices in the event of another tropical storm developing," analysts at the Sucden brokerage said.
"The specter of last year's record hurricane season, where nearly a quarter of US oil and gas production was taken offline, remains hanging over the market."
Elsewhere, the United States and Europe urged Iran on Thursday to suspend uranium enrichment to show it does not seek atomic weapons, with Washington warning of Security Council action if Tehran does not comply.
Speaking at a meeting in Vienna of the UN nuclear watchdog, US ambassador Gregory Schulte said the goal was "to open negotiations for a long-term agreement" on giving Iran benefits in return for guarantees its nuclear program is peaceful.
But Iran's supreme leader Ayatollah Ali Khamenei said Thursday in Tehran that his country would not bow to pressure over its atomic program, implicitly rejecting the calls to suspend enrichment.
It was his first reaction to a package of proposals drawn up by Britain, France and Germany, and backed by the United States, Russia and China, in a bid to defuse the crisis over Iran's nuclear plans.
Washington suspects Tehran of seeking to build nuclear weapons, while Iran has insisted that its nuclear program is strictly for civilian purposes.
Analysts fear that Iran, the world's fourth-largest producer of crude, could halt crude exports if hit by UN sanctions.
AFP 15 1940 GMT 06 06
Copyright ©2006 AFP. All Rights Reserved.
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