Oil surge as Americans hit the roadadmin
World oil prices climbed towards $US74 a barrel because of jitters over petrol supplies on the eve of a holiday weekend in the United States.
New York’s main contract, light sweet crude for delivery in August, climbed US41c to close at $US73.93 per barrel on Friday. The contract earlier hit $US74.15 – the highest point since May 3.
In London on Friday, Brent North Sea crude for August delivery surged US64c to $US73.51 per barrel in electronic deals after earlier touching $US73.35, which was last seen on May 12.
The New York Stock Exchange closed early and will remain closed Monday and Tuesday, making a long weekend of Tuesday’s Fourth of July celebrations, a key event in Americans’ vacation and driving plans.
“The Independence Day holiday weekend in the US starts [on Saturday] and demand for gasoline should be very high, much higher in fact than last year, according to some sources,” Sucden analyst Sam Tilley said.
Some 35 million Americans were expected to take to the roads at the weekend, putting severe strain on the country’s stocks of petrol.
US petrol stocks are under pressure amid the peak-demand driving season.
“Oil prices are continuing to gain support from strong underlying US demand for gasoline where consumption levels are continuing to rise despite prices that are up over 20 per cent year-on-year,” Barclays Capital analyst Kevin Norrish said.
Fimat analysts agreed, saying “demand looks quite resilient with American drivers expected to take to the road in record numbers during the July 4 weekend.”
Prices were also underpinned by the continued closure of a key shipping channel in Louisiana, which has limited output at three refineries, Fimat said.
Bill O’Grady of AG Edwards noted that a spate of refinery problems and supply disruptions were “adding to the bullish tone of the market”.
Oil prices extended gains after a report on Wednesday by the US Department of Energy showed steep falls in petrol and crude stockpiles.
Petrol stocks in the US had fallen by 1 million barrels to 212.4 million in the week ended June 23, compared with market expectations of a rise of 450,000 barrels.
According to the Department of Energy, demand for petrol rose 1.2 per cent in the week to 9.54 million barrels per day, matching a record high set in August 2005.
Crude prices are now within sight of record peaks.
New York crude hit a record $US75.35 in April.