Oil prices hold above $65 as storm sets course for Gulf of Mexico
Oil prices hold above $65 as storm sets course for Gulf of Mexico
Associated Press, Vienna
Oil futures held above US$65 a barrel on Tuesday amid lingering global supply concerns despite resumed crude flows from Ecuador and Nigeria.
The rise came amid expectations that Wednesday's U.S. petroleum inventories will show declines in both crude and gasoline stocks with little indication that high prices are slowing demand.
A new tropical storm heading toward the Gulf or Mexico added to worries. Still analysts cautioned against overemphasizing its effect on the market, saying such weather was widely expected this time of year.
Light, sweet crude for October on the New York Mercantile Exchange was down 2 U.S. cents at $65.63 a barrel by afternoon in Europe on its opening day of trade as the front-month contract. It had settled 14 U.S. cents lower to $65.65 on Monday.
Nymex crude reached an all-time high of $67.10 a barrel Aug. 12. Prices are around 40 percent higher than a year ago, and the Global Center for Energy Studies, or GCES, warned on Tuesday that it could keep climbing.
"Rising global oil demand is continuing to put pressure on the industry's ability to supply enough oil," the London-based resources institute said in its latest report.
The world's daily diet of crude is expected to average around 83 million barrels in the current third quarter before spiking to 85.5 million barrels a day in the fourth quarter of 2005 during winter, GCES said.
With the end of the American summer driving season looming, analysts are now watching winter demand for distillates -- heating oil, diesel and jet fuel -- when consumption of the commodities rise.
Nymex heating oil was up slightly at $1.8165 a gallon (3.8 liters) while gasoline was down somewhat, fetching $1.8558 a gallon.
On London's International Petroleum Exchange, October Brent crude was 17 U.S. cents at $64.67 a barrel.
On Wednesday, the U.S. Department of Energy will release its weekly petroleum data snapshot, an indicator of demand from the world's largest energy user.
Analysts surveyed by Dow Jones Newswires predicted that gasoline stocks will fall by a million barrels from a week ago, while crude probably fell by 255,000 barrels.
Meanwhile, Tropical Storm Jose formed and began to pick up strength late Monday, heading for Mexico's Gulf coast as the active Atlantic hurricane season continued to roil oil markets. Hurricanes have forced rig and production shutdowns on both the U.S. and Mexican sides of the Gulf, hurting supply.
Over the short term, however, some analysts suggested prices could drop.
"It needs more than a tropical depression," said Paul Horsnell, head of energy research at Barclay's Capital in London of what it would take for a new rally.
"You will be looking at the low $60s before any platform can be made for a more sustained move up."