LONDON/SINGAPORE (Reuters) – Oil climbed further above $72 on Thursday, extending a week-long rally, as resilient U.S. gasoline demand and lingering geopolitical tensions offset inflation fears.
U.S. crude rose 28 cents at $72.47 a barrel by 0940 GMT, adding to gains of 27 cents on Wednesday. London Brent crude traded 40 cents higher at $71.81.
Prices have risen in six consecutive sessions in a gasoline-led rally, as American drivers continue to fill up their tanks despite high pump prices.
Gasoline prices rose after inventories fell by 1 million barrels amid strong demand ahead of the July 4 Independence Day holiday when travel is expected to be busier than ever.
U.S. crude stocks also declined a larger-than-expected 3.4 million barrels last week as imports slipped and refinery use rose, government figures showed on Wednesday.
“The numbers still worried the market even though inventory levels remain comfortable,” said Tobin Gorey of the Commonwealth Bank of Australia. “Many observers thought U.S. consumers were finally feeling the pinch at these high price levels — these numbers suggest not.”
Prices also drew strength from the closure of a key shipping channel in Louisiana, which limited output at three refineries.
The U.S. government has agreed to lend 750,000 barrels of crude oil from the Strategic Petroleum Reserve to refineries owned by Citgo Petroleum Corp. and ConocoPhillips near Louisiana, which have had supplies reduced because of the shipping problems.
The U.S. Coast Guard said on Wednesday about nine miles of the channel had reopened and about 11 miles remained closed.
Supply disruptions and geopolitical worries in producer countries, against a backdrop of growing demand, have led to fund buying that has driven oil up from $20 at the start of 2002. Adjusted for inflation, oil is at its most costly since 1980.
Foreign ministers from the G8 leading industrialized countries discussed further steps it should take to persuade Iran to halt its nuclear program.
Iranian Foreign Minister Manouchehr Mottaki is expected to hold a news conference at the United Nations in New York at 1530 GMT.
The market will also be awaiting a decision from U.S. Federal Reserve policy makers, who are expected to raise interest rates and signal that further increases may be needed to keep inflation in check.
High crude prices have helped exacerbate inflation fears, sparking concerns that global oil demand growth could weaken.