Oil prices accelerate on strong demand
June 15, 2006
Singapore - Oil prices continued to rise in Asian trade on Thursday on news of a fall in US crude stockpiles, with China's strong industrial growth figures also boosting demand expectations, dealers said.
At around 11.00am Singapore time, New York's main contract, light sweet crude for July delivery, was up 26 cents to $69.40 a barrel from its close of $69.14 in the United States on Wednesday.
Brent North Sea crude for July delivery gained four cents to 67.02 dollars.
"The gradual appreciation of prices is caused by the decline in crude stocks in the United States," said Dariusz Kowalczyk, a Hong Kong-based investment strategist with CFC Seymour.
The US Department of Energy (DoE) released its weekly inventory report Wednesday showing a rise in US reserves of gasoline but a dip in crude stocks.
The DoE said crude inventories fell 900 000 barrels to 345.7 million barrels in the week to June 9. Analysts had expected a smaller fall of 700 000 barrels.
Reserves of gasoline, which are under scrutiny as US drivers take to the roads en masse for summer holidays, rose 2.8 million barrels last week to 213.1 million. That was double the forecast rise.
US inventories of distillate fuels such as diesel and heating oil rose by 2.1 million barrels to 122.8 million.
The DoE also reported that US refineries operated at 92.7 percent capacity in the past week, up from 91 percent in the prior week.
Reports of China's strong industrial growth in May also boosted expectations that the world's most populous nation may further increase its energy intake to fuel its economic expansion, dealers said.
The National Bureau of Statistics said Wednesday that China's industrial output picked up in May with a year-on-year gain of 17.9 percent, in a further illustration of the Asian nation's stubbornly strong economic momentum.
"China grew faster than expected ... so this is definitely bullish for prices," Kowalczyk said.
Also supporting prices was the continued stalemate over Iran's controversial nuclear program.
World powers, seeking to woo Iran with incentives in return for guarantees its nuclear program is peaceful, held off threatening sanctions, diplomats said Wednesday at a meeting of the UN atomic energy agency.
This new development may lead to a breakthrough between the West and Iran after wrestling for months over Tehran's continued uranium enrichment which Washington suspects is a clandestine drive to build nuclear weapons.
However, Iran has insisted that its nuclear program is strictly civilian and has not given any signals as to whether it will accept the offer of incentives to halt uranium enrichment.
Dealers fear that Iran, the world's fourth largest producer of crude, will halt its crude exports in retaliation if faced with harsh UN sanctions. - AFP
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