Oil keeps knocking down records
U.S., Brent crude hit new trading highs, pushed up by drop in U.S.
gasoline stocks, Iran supply jitters.
April 20, 2006: 6:39 AM EDT
SINGAPORE (Reuters) - Brent crude oil jumped to a fresh record high
above $74 a barrel on Thursday after a steep drop in U.S. gasoline
stocks fueled fears of tight summer supplies at a time of growing
anxiety over Iran's exports.
IPE Brent crude climbed as high as $74.22 a barrel, its eighth
consecutive session to mark a new peak. It was trading up 20 cents at
$73.95 a barrel in morning trade.
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U.S. May crude oil futures rose 32 cents to $72.49 a barrel, its third
day running to make a new all-time high.
Prices extended this month's blistering run after the U.S. government
reported a larger-than-expected decline in weekly gasoline inventories
of over 5 million barrels, a seventh draw that put them nearly 5
percent below last year's level.
"The dwindling stock levels for gasoline is a serious concern,
especially... with the U.S. driving season ahead of us," said Tony
Nunan, manager of the risk management business at Mitsubishi Corp. in
Tokyo.
Stocks fell as imports thinned and demand for motor gasoline averaged
over 9.1 million barrels per day (bpd), 0.8 percent more than a year
earlier, the U.S. Energy Information Administration (EIA) said.
The data also showed an unexpected 800,000-barrel draw in crude oil
stocks, while distillates fell 2.8 million barrels but remained ahead
of year-earlier levels. S
"Healthy crude oil inventories have been keeping a lid on oil from
rising further, but if we continue to see a drawdown in stock levels,
that lid could come off," Nunan said.
Oil prices have tripled since 2002 and analysts see few signs of
flagging as levels push closer to the early-1980s, inflation-adjusted
peak of more than $80 a barrel, setting alarm bells ringing in
consuming nations.
Iran defiant
Tensions between Iran and the West over its resolve to expand its
nuclear program kept prices on the boil as analysts fear the dispute
could escalate, disrupting shipments from the world's fourth-largest
oil exporter.
Iranian President Mahmoud Ahmadinejad said oil had not yet reached its
"real value" despite the recent price surge, the official IRNA news
agency reported late on Wednesday.
The head of the International Energy Agency (IEA), gatekeeper of 4
billion barrels of potential emergency reserves, reiterated on
Wednesday that the agency was ready to release oil stocks if Iran
stopped exports, but analysts remained anxious.
"Losing Iran supplies will have a massive impact on the market, and
there is no way that other Middle East producers are going to be able
to make up for that loss," said Hiroyuki Kitakata, director of
commodities business at Barclays Capital Japan.
On Wednesday U.S. Secretary of State Condoleezza Rice said the
international community agreed Iran could not have a nuclear weapon and
was mobilized to respond.
"In order to turn the Iranians back from what has been behavior that is
contrary to all the wishes of the international community, we are
prepared to use measures at our disposal -- political, economic,
others, to dissuade Iran," Rice said.
The strong rhetoric comes just a day after President Bush refused to
rule out nuclear strikes if diplomacy failed to curb Tehran's defiance.
Iran, which pumps close to 5 percent of the world's crude, declared
last week it had enriched uranium to a low level and planned to produce
it on an industrial scale.
Separately, Venezuela's President Hugo Chavez threatened to blow up the
country's oilfields in the event of a U.S. invasion, which he and his
supporters from poor neighborhoods, considers a serious possibility.
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