SINGAPORE, AP -Crude futures held above $70 a barrel Friday, anchored by strong fuel demand, refinery glitches and jitters about the unresolved tension between the West and Iran.
Iran’s deputy nuclear negotiator, Javad Vaeidi, has rejected freezing uranium enrichment as a precondition for talks, but held out the possibility that negotiations on its nuclear program could result in such a moratorium — a stance Tehran has repeated in the previous weeks.
Even a rise in crude inventories in the U.S. government’s latest petroleum supply report did not work to curb already-inflated prices, as traders seemed more worried about the smaller-than-expected build in gasoline supplies, which came at a time when refineries are boosting production for the Northern Hemisphere summer driving season.
Crude inventories rose 1.4 million barrels to 347.1 million barrels in the week ended June 16, according to the U.S. Department of Energy, at their highest level since May 1998, while the build in U.S. gasoline inventories was a mere 300,000 barrels.
But Tetsu Emori, chief commodities strategist for Mitsui Bussan Futures, said Friday’s slight rise is largely technical, based on the market’s support for prices within the $68-$72 range.
Light, sweet crude for August delivery rose 4 cents to $70.88 on the New York Mercantile Exchange, by midday in Europe. Brent crude for August fell 7 cents to $69.88 a barrel on London’s ICE Futures exchange.
Emori said that the current market sentiment is bullish, due to the “psychological factor” of the Iranian issue and peak summer fuel demand.
“Prices are going to hit $72 in the summer season, when gasoline demand will rise in July,” Emori said.
In other Nymex trading, gasoline futures for July rose less than half a cent to $2.1200 per gallon. July heating oil futures fell more than a cent to $1.9575 a gallon, while natural gas futures slipped 2 cents to $6.416 per 1,000 cubic feet.
The mood in the energy markets has seesawed in recent weeks as traders try to gauge from the verbal sparring between Iran and the West the possibility of Iran — the world’s fourth-largest oil producer and exporter — halting exports.
Refineries are trying to boost gasoline output in preparation for the U.S. July 4 holiday, when demand rises as Americans travel. But analysts have noted that plant capacity has been reduced due to the damage from last year’s hurricanes to Gulf of Mexico coast refineries.
Refinery glitches have also left traders jittery. Exxon Mobil Corp.’s Baytown refinery had problems restarting earlier this week, and an oil spill in a Louisiana channel also affected some refinery operations.