World
 
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World oil prices recover
By Jitendra Joshi
AFP
NEW YORK
Petroleumworld.com 08 12 06
Oil prices rebounded Friday on hopes that BP can keep some crude pumping out its stricken Alaskan oil field, following a slump the day earlier caused by a foiled plot to bomb US-bound planes.
New York's main contract, light sweet crude for delivery in September, gained 35 cents to close at 74.35 dollars a barrel.
In London, Brent North Sea crude for September delivery also climbed 35 cents to settle at 75.63 dollars a barrel.
On Thursday, New York futures had tumbled 2.25 dollars and Brent was down 2.00 dollars on fears the alleged plot to destroy passenger jets headed to the United States from Britain would curb demand for air travel and jet fuel.
But according to Oppenheimer energy analyst Fadel Gheit, "the selling on the terrorist attack news was completely exaggerated".
"The carriers have never had so many passengers," he said.
Barclays Capital analyst Kevin Norrish agreed that Thursday's slump was "overdone".
"The logic usually employed by analysts after such an incident is that prices should fall because of the danger of reductions in travel demand, and because a loss in consumer confidence could cause economic weakness which could reduce oil demand," he said.
"It is very difficult, in our view, to see the current incident as impacting on travel demand sufficiently to be able to affect prices at the global level."
In its latest oil market review, the International Energy Agency held its estimate of world oil product demand unchanged at 84.8 million barrels per day this year.
"For the time being, the market can cope with current outages," the Paris-based organisation said.
It said the impact of disruption to supplies from the BP field in Prudhoe Bay would probably be substantially less than first feared because of offsetting factors elsewhere.
BP said Friday it had a green light from the US government to continue operations from part of the giant oil field in Alaska, where a corroded pipeline sprang a leak last week.
When operating at full capacity, Prudhoe Bay pumps out 400,000 barrels of oil a day -- 8.0 percent of total US daily output.
After the pipeline leak was discovered a week ago, BP started scrambling to shut down the entire field while it upgraded ageing infrastructure dating from the late 1970s.
Oil prices shot up Monday on the BP news, with Brent crude striking a fresh record high of 78.64 dollars per barrel.
But the company says it is still producing 120,000 barrels of oil a day from the field and hopes to keep some output operational.
"The Prudhoe Bay situation seems to be not as bad as thought earlier in the week," Wachovia Securities analyst Jason Schenker said.
"If the situation is getting even better, and if a resolution on Lebanon is found, wich seems possible, then prices could turn lower next week," he said.
A French-US resolution aimed at ending the month-long conflict between Israel and Hezbollah militants in Lebanon was to be presented to the UN Security Council later Friday, a French diplomat said.
Oil traders also monitored Iran's defiance of Western efforts to curb its uranium enrichment, and potential hurricane damage to oil installations in the US Gulf of Mexico.
"In this oil market today, there are many moving parts and the markets will remain very volatile reacting to short-term world events," said Victor Shum, a Singapore-based analyst with energy consultancy Purvin and Gertz.
"The market still has more upside than downside," he added.
AFP 111943 GMT 08 06
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