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Oil prices simmer near record highs
AFP
NEW YORK
Petroleumworld.com 07 07 06
World oil prices simmered near record highs on Thursday as traders fretted over record US gasoline (petrol) demand and geopolitical concerns linked to North Korea and Iran.
New York prices lost a little momentum while oil prices in London were trading slightly higher, but in both markets prices hovered close to record levels.
New York's main contract, light sweet crude for delivery in August, closed down five cents at 75.14 dollars per barrel.
The contract had struck an all-time intraday record of 75.40 dollars per barrel in trading Wednesday. That exceeded the previous intraday peak of 75.35 dollars, set on April 21.
In London deals on Thursday, Brent North Sea crude for August delivery closed up 10 cents at 74.08 dollars per barrel in electronic trading.
Brent had touched 74.22 dollars per barrel the day before -- marking the highest level since May 2 when it hit a record 74.97 dollars.
"Participants want to see if stocks are adequate to get through the (US) driving season, especially as supply could be disrupted by hurricanes later this summer," said John Kilduff, an energy analyst at Fimat USA.
US oil prices moderated despite a key report from the Department of Energy showing a worse than forecast drop in weekly crude oil inventories.
However the report also revealed that gasoline demand was experiencing record daily demand, as Americans tour the highways on vacation, although gasoline stocks showed a surprise build.
The DoE inventories report showed crude oil reserves fell 2.4 million barrels to 341.3 million over the week ended June 30.
Analysts had forecast a decline of just 650,000 barrels.
Gasoline reserves, which are under scrutiny because of peak US demand during the driving season, showed an unexpected rise of 700,000 barrels to 213.1 million.
Analysts had predicted a drop of 2.0 million barrels.
Demand for gasoline rose 1.1 percent from the prior week, to 9.645 million barrels per day, an all-time high.
"It was extremely bearish (for prices) to see gasoline stocks build by 700,000," Societe Generale analyst Deborah White said.
Falls were limited, however, owing to the rise in gasoline demand and a drop in output by refineries, she added.
The DoE also reported that US refineries operated at 93.1 percent capacity in the past week, down slightly from 93.8 percent in the previous week.
"The markets initial reaction to the data was bearish, due to the unexpected rise in gasoline stocks," said AG Edwards analyst Bill O'Grady. "However, the fact that (refinery) run rates have stalled is still a major worry for products," O'Grady said.
White, meanwhile, said she expected prices to rebound.
On Wednesday, crude futures surged to a record high in New York following news that North Korea had fired at least seven test missiles, and after major crude producer Iran postponed crucial talks in Brussels over its nuclear program.
International uncertain about both North Korea and Iran continues to support oil prices, according to analysts.
Although North Korea is not an oil producer, the geopolitical news convinced investment fund managers to "hunt as a herd" to search for gains from the crude oil market, said Investec analyst Bruce Evers.
"They saw the geopolitical situation develop and they all jumped in," he added.
OPEC producer Iran's standoff with Western powers over its nuclear energy ambitions remains a key concern for the market.
The UN Security Council is awaiting Iran's answer to an offer of economic and political incentives in exchange for a suspension of its uranium enrichment.
AFP 061947 GMT 07 06
Copyright ©2006 AFP. All Rights Reserved.
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