OIL PRICES BOUNCED OFF daily lows to climb toward $107 a barrel today on Kuwait’s decision to temporarily suspend crude exports because of sandstorms.
Kuwait, a member of OPEC, produces about 2.4m barrels of crude a day, so the halt has exacerbated worries about global supply.
The conflict in Libya and protests across the Middle East already have investors worried that larger producers could suffer production slowdowns.
By early afternoon in Europe, benchmark crude for May delivery was up 63 cents at $106.88 a barrel in electronic trading on the New York Mercantile Exchange. Earlier in the session, the contract fell as low as $105.37 and gave up $3.67, or 3 per cent, to settle at $106.25.
Crude fell sharply yesterday after Goldman Sachs warned investors that oil prices had already topped its second-quarter forecast and were due for a “substantial pullback” in the near term.
Traders also mulled whether higher fuel costs would undermine crude demand enough to stymie a two-month rally.
Mixed signals
Key energy groups sent mixed signals to investors Tuesday about the impact a 33 percent surge in oil prices since mid-February has had on demand.
The International Energy Agency and the Organization of Petroleum Exporting Countries said higher prices had begun to chip away at fuel consumption, though they left their demand forecasts unchanged.
“High oil prices are yet to show any considerable impact on oil demand,” Barclays Capital said in a report. “It is far too premature to signal that the first signs of demand destruction are already noticeable.”
The American Petroleum Institute said late yesterday that crude inventories rose 1.2m barrels last week, close to an increase of 1.6m barrels forecast by analysts surveyed by Platts, the energy information arm of McGraw-Hill Cos.
However, the API also said inventories of gasoline fell by 4.6m barrels while the Platts survey showed analysts expected a fall of only 1.3m barrels, suggesting gasoline demand in the US remains strong.
In London, Brent crude for May delivery was up 84 cents to $121.76 a barrel on the ICE Futures exchange.
In other Nymex trading in May contracts, heating oil rose 0.86 cent to $3.1812 a gallon and gasoline gained 2.47 cents to $3.1888 a gallon. Natural gas futures fell 2.1 cents to $4.077 per 1,000 cubic feet.
- AP
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