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Oil prices surge as US gasoline stocks plunge
AFP
NEW YORK
Petroleumworld.com 06 29 06
World oil prices surged Wednesday as traders seized on news of a surprising drop in US gasoline inventories, raising supply concerns as American demand ramps up for the holiday driving season.
A steeper than expected decline in US crude oil inventories also supported prices, analysts said.
New York's main contract, light sweet crude for delivery in August, climbed 27 cents to close at 72.19 dollars per barrel.
In London, Brent North Sea crude for August delivery rose 43 cents to 71.41 dollars per barrel.
US reserves of gasoline fell by one million barrels to 212.4 million over the week ended June 23, the Department of Energy (DoE) said Wednesday in its weekly market update.
That overturned analysts' consensus forecasts of a rise of 450,000 barrels.
The DoE said that crude oil reserves fell by 3.4 million barrels to 343.7 million over the week.
"The numbers were extremely bullish," said Societe Generale analyst Deborah White.
"The crude stock draw was pretty much triple expectations.
"The forecasts were very mixed for gasoline, but most of us were still expecting builds."
Gasoline stocks took a pounding in the past week as the peak US driving season in the United States shifted into gear.
Demand for gasoline rose 1.2 percent from the prior week, to 9.54 million barrels per day, matching its record high set for the first time in August 2005.
"It is a normal pattern for US demand to accelerate when there's more and more driving in the school holidays, in the summer break," added White.
Over the past four weeks, US gasoline demand has run 0.9 percent higher than in the same period a year ago, the DoE said.
Bill O'Grady of AG Edwards said oil prices were expected to remain supported this week. The New York Mercantile Exchange closes early Friday, at 1:00 pm (1700 GMT), for the long Fourth of July holiday weekend. The NYMEX will reopen Tuesday at 6:00 pm (2200 GMT).
"We are seeing a strong rally and expect it to last into Friday's close, as there is simply too much political risk for one to take a short position for that length of time," O'Grady said.
Crude futures have climbed this week, supported by refinery disruption and strong energy demand in the United States and China, as well as jitters over the Iranian nuclear energy crisis.
A package drawn up by the five permanent UN Security Council members -- Britain, China, France, Russia and the United States -- plus Germany promises Iran incentives and multilateral talks if it agrees temporarily to halt uranium enrichment.
The enrichment work is at the centre of international concerns that Iran is using a Russian-backed civilian nuclear power programme to pursue a secret weapon-building plan.
Iran has not formally responded to the June 6 offer.
Iran said Monday it would use its vast oil resources only as a weapon of last resort in the international dispute.
AFP 28 2020 GMT 06 06
Copyright ©2006 AFP. All Rights Reserved.
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