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Oil prices strengthen on threats to Saudi installations
AFP
SINGAPORE
Petroleumworld.com 10 30 06
Oil prices were firmer in Asian trade on Monday following news of possible terrorist threats to Saudi Arabia's oil installations, dealers said.
At 2:40 pm (0640 GMT), New York's main contract, light sweet crude for December delivery, climbed four cents to 60.79 dollars a barrel from 60.75 dollars in late US trade Friday.
Brent North Sea crude for December was up six cents to 61.14 dollars.
"Oil prices seem to be bouncing up a bit, reacting to the threats to Saudi oil ports," said Victor Shum, an analyst for Purvin and Gertz in Singapore.
Oil installations in Saudi Arabia are a "high-probability potential target" for terrorist attack but tight security measures are in place to protect them, the Saudi interior ministry said Friday.
"Coalition forces are taking prudent, precautionary measures and focusing maritime security operations in the Gulf on these possible threats," a Bahrain-based spokesman for Western naval forces in the Gulf told AFP.
Saudi Arabia pumps more than nine million barrels of oil per day and sits on a quarter of global oil reserves. It operates the world's largest oil terminal at Ras Tannura in the Gulf.
"I think the market is also reacting to the surprise drop in US inventory levels last week and that is why prices are strengthening," said Singapore-based analyst Shum.
US crude oil inventories unexpectedly fell 3.3 million barrels to 332.3 million in the week to October 20, compared with market forecasts of an increase by a similar amount.
That was the largest weekly fall since July but the DoE said crude levels "remain well above the upper end of the average range for this time of year."
The fall in US inventories suggested to some traders that the 11-nation Organization of the Petroleum Exporting countries (OPEC) cartel was following through on a promise to reduce output by 1.2 million barrels a day.
OPEC is battling to support crude prices, which stand about 25 percent lower than record highs of above 78 dollars reached in July and August.
"The markets' next move will mostly depend on the Northern Hemisphere winter season weather, then the inventory situation and the global economic outlook," said Shum.
He said with a cold winter, declining inventory levels and strong economic growth from leading economies, market fundamentals would strengthen prices.
AFP 30 0650 GMT 10 06
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