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Oil Rises Above $119 as Supply Concerns Re-emerge - ASHARQ AL-AWSAT English Archive
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LONDON (Reuters) – Oil recovered from three-month lows to rise by more than $1 on Thursday as supply concerns returned to centre stage in a market that has come under pressure from growing evidence of slower fuel demand.

U.S. crude rose $1.11 to $119.67 a barrel by 5:24 a.m. EDT, after the contract recovered from a three-month-low hit in the previous session.

London Brent crude climbed $1.28 to $118.28.

Supply concerns came to the fore again, as the Baku-Tbilisi-Ceyhan pipeline with a capacity of one million barrels per day of Azeri light crude remained closed following a fire, for which Kurdish separatists claimed responsibility.

A source in Turkey’s state-owned pipeline company Botas said the pipeline fire would last for two more days and it could take up to two weeks for the pipeline to restart.

The pipeline explosion in Turkey highlights the growing influence of geopolitical factors on the oil market.

Oil supplies from OPEC member Nigeria have been repeatedly disrupted by militant attacks, while escalating tension between Iran, the world’s fourth largest producer, and the West over Tehran’s nuclear program has the potential to cripple global oil supplies.

However, oil is almost 20 percent off the record of $147.27 a barrel hit on July 11 and prices have fallen across the commodities complex.

“While in our view many of the fundamentally bullish elements of the market remain in place, buying interest has for now taken a step back,” Harry Tchilinguirian, oil analyst at BNP Paribas, said in a research note.

UBS analyst Jan Stuart said oil market fundamentals did not warrant “this sudden and significant bearish turn” and the supply risk had not reduced and could provoke a whiplash price surge.

Data from the U.S. government’s Energy Information Administration on Wednesday showed a much steeper than expected build in crude stocks, the latest sign soaring fuel costs and an ailing economy have reduced oil demand.

Crude oil inventories rose by 1.7 million barrels in the week to August 1, beating expectations of a 300,000-barrel build. Distillate stocks, including heating oil and diesel, rose by 2.8 million barrels, also above forecasts.

However, gasoline stocks fell by 4.4 million barrels, much steeper than the 1.2 million barrel draw analysts had predicted.

Asharq Al-Awsat

Asharq Al-Awsat

Asharq Al-Awsat is the world’s premier pan-Arab daily newspaper, printed simultaneously each day on four continents in 14 cities. Launched in London in 1978, Asharq Al-Awsat has established itself as the decisive publication on pan-Arab and international affairs, offering its readers in-depth analysis and exclusive editorials, as well as the most comprehensive coverage of the entire Arab world.

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