London oil rises ahead of US gasoline stock data

London oil prices rose on Wednesday ahead of data that could show a large drop in U.S. gasoline stocks after a long holiday weekend, while North Korean missile launches added to geopolitical worries for the market.

London Brent crude traded up 19 cents at $72.70 a barrel by 0842 GMT. U.S. light crude shed 38 cents to $73.55, lagging Brent’s loss of almost $1.00 in thin trading over NYMEX’s two-day Independence Day closure on Monday and Tuesday.

NYMEX prices had rallied more than $3.00 a barrel last week as U.S. drivers began to hit the roads for the summer holidays.

“After gasoline inventories began to fall last week the key focus is now where they go this week,” said Gerard Burg, energy economist at the National Australia Bank.

“The market wants to see if stocks are adequate to get through the summer driving season, especially as supply could be disrupted by more hurricanes.”

The next snapshot on U.S. fuel inventories will be released on Thursday, a day later than usual because of the Independence Day break.

Analysts expect to see a strong draw on stocks despite near-record prices. U.S. unleaded gasoline prices rose nearly 7 cents to average $2.93 a gallon last week, just below the record of $3.056, the Energy Information Administration said on Monday.

POLITICAL TENSIONS

U.S. crude has rallied by around 20 percent since the end of last year, pushed higher by anxiety about oil producer
Iran’s dispute with the West over its nuclear program, as well as disruption of oil output by militant attacks in Nigeria.

Wednesday saw geopolitical tensions heightened after North Korea launched a series of missiles into the Japan Sea.

The missiles included a long-range one able to reach Alaska, although it apparently failed 40 seconds into its flight, U.S. officials said.

“There’s not much oil production in the region so this doesn’t point to supply disruption,” said NAB’s Burg. “But it is yet another political issue of the sort which has kept oil at the topside of its range over the past few weeks.”

Providing some relief from supply concerns, Iraq said it planned to invite international oil companies to help develop its giant oilfields before the end of this year.

Iraq, home to the world’s third-biggest oil reserves which are estimated at 115 billion barrels, needs up to $20 billion in foreign investment to boost production.