Crude oil prices rise to 12-week high in Asia
Crude oil prices rise to 12-week high in Asia
SINGAPORE (Reuter): Crude oil prices in Asia surged yesterday to their highest level in 12 weeks, spurred by firmer markets in the West.
Surging demand for gasoline on the east coast of the United States has pulled crude oil on the New York Mercantile Exchange (NYMEX) higher, pulling other crude oil prices like North Sea Brent up in their wake.
Yesterday, August North Sea Brent crude oil futures on the Singapore International Monetary Exchange (SIMEX) were traded at US$20.55 per barrel -- up 10 cents form Monday's London close and the highest for a front-month contract since April 24 when prices reached $20.60.
By 0830 GMT, crude prices on SIMEX had retreated to $20.38.
August crude futures contracts on the New York mercantile Exchange's overnight trading system slipped to $22.39 a barrel, from the New York closing level of $22.48.
Traders said funds were supporting the market by switching out of weakening equity markets into oil in the wake of Wall Street's slide.
"There does not seem to be any direct reason for higher prices," said a trader in Singapore. "It's an accumulation of small bits and pieces."
In New York overnight, traders worried about tightening supplies of gasoline on the U.S. east coast. This drove August gasoline futures, also trading on NYMEX, to 65.56 cents per gallon -- the highest level since May 21.
In addition, North Sea crude oil platforms are approaching August, a key period when several will be shut down for maintenance.
Some traders said the stop-start nature of talks between Iraq and the U.N. over plans for Iraq to raise $2 billion from oil sales was also supportive.
Others said Iraq was a bearish factor and the oil price rise was in the face of weakening oil fundamentals.
Iraq appeared close to finalizing the details of an oil plan with the United Nations. The result could be around 700,000 barrels of Iraqi crude on the market in the next few months.
U.N. Secretary General Boutros Boutros-Ghali is to review a food distribution plan handed to him on Monday by chief Iraqi negotiator Abdul Amir al-Anbari.
"I am waiting for his decision after he studies the plan," al- Anbari said, adding Boutros-Ghali's review should take around 24 hours.
If Boutros-Ghali endorses the plan it could clear one of the last remaining hurdles to Iraq's re-entry into the world oil market since it was banned after its invasion of Kuwait in 1990.
Despite the surge in Brent crude prices, Asian grades were not benefiting to the same extent, traders said.
Refineries in Singapore, some of the region's major buyers and swing product producers, have cut back crude buying because of production cuts owing to weak profit margins.
The Asian benchmark, Indonesian Minas crude, was valued yesterday around $19.75 per barrel, up just 20 cents from Monday.
"The market is definitely better offered than bid," one trader said, referring to the Asian crude oil market. He said that was a sign of weakness to come.