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Oil prices rally as US gasoline reserves flatten
AFP
NEW YORK
Petroleumworld.com 06 14 07World oil prices surged higher Wednesday after the US government reported gasoline reserves were unchanged last week, dashing expectations of a build during the American vacation driving season.
In Abu Dhabi, OPEC president Mohammad bin Dhaen al-Hamli said he felt crude markets were well supplied, ruling out a production increase sought by consumer countries.
The market also awaited a report by the UN atomic watchdog on the nuclear program in Iran, the world's fourth-biggest producer of crude oil.
New York's main oil futures contract, light sweet crude for delivery in July, climbed 91 cents to settle at 66.26 dollars per barrel.
In London, Brent North Sea crude for July delivery jumped 1.15 dollars to close at 69.94 dollars per barrel.
Crude prices jumped after the US Department of Energy (DoE) said US inventories of motor fuel were flat at 201.5 million barrels in the week ending June 8, well below the average range for this time of year and ending a five-week streak of gains.
Market expectations were for a gain of 1.6 million barrels.
The DoE added that US crude oil reserves rose by 100,000 barrels last week to 342.4 million barrels, confounding analysts' forecasts for a decline of 275,000 barrels.
Stocks of distillates -- gas and heating fuel -- rose by 300,000 barrels to 122.6 million but were still below the level a year ago.
"The report is bullish. The market anticipated significant builds in both products and both disappointed," said Eric Wittenauer of AG Edwards.
Prices were also supported by a decline in refinery utilization for the second consecutive weak, he said.
Gasoline supplies remain in focus amid the current US driving season when demand for motor fuel traditionally peaks as holidaymakers hit the nation's roads.
Despite recent weekly increases, gasoline stocks in the United States remain at historically low levels for this time of year.
In Abu Dhabi, OPEC president Hamli, who is also the United Arab Emirates energy minister, was quoted by the official Wam news agency as saying that "oil market supplies are sufficient."
He said the increase in oil prices was the result of "political tensions in certain oil producing regions, market speculation and bottlenecks at refineries in consumer countries."
As if to underscore his comments, Iran slammed UN efforts to rein in its nuclear program as the UN's atomic watchdog met to hear a report that could bring new sanctions one step closer.
International Atomic Energy Agency chief Mohamed ElBaradei was to tell the IAEA's 35-nation board of governors that Iran is still expanding uranium enrichment work, in defiance of UN Security Council resolutions.
Analysts warn that Iran might decide to disrupt its oil exports if hit with new sanctions.
On Tuesday the International Energy Agency raised its prediction for global crude demand in 2007.
The IEA predicted that global oil demand would increase by two percent this year, revising upwards an earlier estimate by some 400,000 barrels per day, owing partly to a big adjustment of previous demand data.
In its report, however, the IEA also warned that oil market supplies would be tight in the second half of this year, which risked pushing prices up further.
OPEC president Hamli called in Abu Dhabi for "intensified dialogue between producer and consumer countries to consolidate market stability and the global economy."
AFP 13 2020 GMT 06 07
Copyright© 2007 AFP. All Rights Reserved.
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