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Oil Rises Nearly $1 on U.S. Inventory Fall - ASHARQ AL-AWSAT English Archive
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SINGAPORE (Reuters) – Oil rose nearly $1 on Thursday, moving closer to $117 a barrel, as a larger-than-expected drawdown in crude and gasoline stocks in the United States rekindled supply concerns.

U.S. crude was up 86 cents at $116.86 while ICE Brent climbed 72 cents to $114.19 by 0635 GMT, extending overnight gains.

U.S. oil prices jumped $3 on Wednesday after the Energy Information Administration (EIA) said U.S. crude stocks dropped 400,000 barrels, while gasoline inventories fell by 6.4 million barrels in the week to August 8 as refinery throughput decreased.

The fall in gasoline stocks was much larger than analysts’ expectations of a 2.1-million-barrel decline. Distillate stocks also unexpectedly decreased.

Disruptions to exports from the Caspian region also underpinned energy prices as Western powers tried to shore up support for a shaky ceasefire between Russian and Georgian troops around the breakaway region of South Ossetia.

Georgia had accused Russia of breaking the ceasefire in their six-day-old conflict on Wednesday, and President George W. Bush demanded Moscow resolve a crisis that has strained relations with the United States.

Russia, on the other hand, accused the U.S. of playing a dangerous game in the Caucasus by backing Georgia and denied Moscow was not doing enough to prevent looting.

BP has closed an oil pipeline and a natural gas pipeline running from its Caspian Sea fields through Georgia but said neither had been damaged.

A third BP pipeline that runs through Georgia, the Baku-Tblisi-Ceyhan oil pipeline, was shut last week following an explosion in Turkey.

However, oil is still far away from this year’s peak of more than $147 a barrel hit in mid-July, and analysts said it’s unlikely the market could move anywhere close to that level soon.

“There are not that many factors that can drive prices higher,” said Gerard Burg, a commodities analyst at National Australia Bank in Melbourne.

“The conflict in Georgia does not have that much impact. The pipeline was already offline,” he added.

High energy prices in many parts of the world have prompted motorists to drive less, slashing demand.

The U.S. Transportation Department said on Wednesday that Americans drove 12.2 billion miles, or 4.7 percent, less in June compared with a year earlier. It was the eighth month in a row driving declined

Traders are now watching OPEC to see if it will cut back on oil supplies.

Iran’s OPEC governor Muhammad Ali Khatibi said on Tuesday that the organization should trim its oil output if demand continues to fall in slowing industrialized economies.

Khatibi said Iran is pumping around 4 million barrels per day out of total capacity of around 4.3 million bpd. Iran’s informal OPEC target is 3.817 million bpd, although Khatibi said Tehran had never agreed with OPEC’s calculation of that target.

Iran believed it was entitled to produce around 100,000 bpd more than that target, Khatibi said.

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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