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Oil prices steady to higher amid tight US gasoline supplies
AFP
NEW YORK
Petroleumworld.com 06 29 07New York oil prices surged above 70 dollars per barrel briefly for the first time in 10 months Thursday amid tight gasoline supplies in the United States, the world's biggest consumer of energy.
New York's main oil futures contract, light sweet crude for delivery in August, closed up 60 cents at 69.57 dollars after earlier soaring to 70.52 dollars, its highest level since August 28, 2006.
In London, Brent North Sea crude for August delivery shed one cent to 70.52 dollars per barrel.
"Essentially, it is just the extension of the gains of yesterday's rally," said BMO Capital Markets analyst Bart Melek.
Crude prices closed more than a dollar higher on Wednesday after the US Department of Energy (DoE) reported that American gasoline (petrol) stockpiles fell by 700,000 barrels to 202.6 million barrels in the week ending June 22.
That surprised the market, as analysts had expected a gain of 1.0 million barrels.
Gasoline reserves are in focus because of the US summer driving season when demand typically peaks as many Americans take to the roads for their annual vacations.
Gasoline reserves are running well below the lower end of the average range for this time of year, the DoE added in its weekly market update.
Melek said New York oil prices would likely go "significantly above" 70 dollars before the end of the US summer.
Mitsubishi Corp analyst Tony Nunan added: "It looks like the US is not out of the woods yet."Nunan said US gasoline demand was holding up while inventories remained below the five-year average and refinery rates were also well below average for this time of year.
Oil prices have also been supported by concerns about refinery utilization as outages across the United States have created supply problems in the production of gasoline from crude oil.
The DoE said refinery utilization rebounded last week by 1.8 percentage points to 89.4 percent, compared with the previous week.
Elsewhere on Thursday, analysts said high international oil prices may have forced China to postpone filling at least one of its much-anticipated strategic oil reserves.
" The government would prefer to start filling them when oil prices are comparatively low," said Yang Wei, a Shanghai-based oil analyst with Guotai Junan Securities.
" It makes no sense for China to push the price to rise further when it is at a period high now," he told AFP.
The analyst pointed out that oil prices had reached 70 dollars per barrel from below 60 dollars per barrel at the beginning of the year.
The state-run China Daily cited an unnamed official with Sinopec, Asia's largest refiner, as saying the company would kick off the filling of the Huangdao strategic oil reserves in the country's east by the end of 2007.
This could suggest a delay as the company said previously that it would happen by the middle of this year.
China, the world's second-largest importer of oil, has seen its demand for energy rocket as a result of its explosive economic growth, which has been double-digit for four consecutive years.
The Middle East has traditionally been China's main source of oil, but the country has sought energy elsewhere in the world since the US-led invasion of Iraq in 2003 and amid ongoing unrest across the Middle East.
AFP 28 2006 GMT 06 07
Copyright© 2007 AFP. All Rights Reserved.
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