LONDON (Reuters) – Crude oil held steady near $68 on Monday following sharp gains at the end of last week when leading exporter Saudi Arabia said it had foiled an al-Qaeda linked plot to attack oil facilities.
Brent crude, currently seen as more representative of global oil prices than U.S. oil, was down 13 cents at $68.28 a barrel by 1223 GMT. U.S. crude fell eight cents to $66.38.
But U.S. gasoline, the main price driver in recent weeks, strengthened. Gasoline stocks in the world’s top consumer have declined to a six-year low on a combination of strong demand, refinery problems and slow imports.
“Simply put, gasoline prices will likely have to spike further to invite more supply or moderate demand growth,” Goldman Sachs said in a research note.
Brent rallied over one percent on Friday, lifting the week’s gains to nearly $2, after Saudi Arabia said it had arrested Islamist militants, including trainee pilots preparing for suicide operations against oil facilities and military bases.
“Saudi Arabia’s announcement has served as a sharp reminder to the market of the potential risks to oil supplies,” said David Moore, an analyst at Commonwealth Bank of Australia.
“Those risks are not likely to go away soon.”
Underscoring the potential for regional instability, Iran dismissed on Sunday any suggestion it might agree to partially suspend its uranium enrichment activities as a way towards ending a protracted international standoff.
Analysts said the latest statement had dented hopes of an imminent resolution that were raised last week when Iran’s chief nuclear negotiator Ali Larijani said that Tehran and the European Union were nearing a united view.
Tensions between Iran, the world’s fourth-largest oil supplier, and the West over Tehran’s nuclear program have been in the background for more than a year.
Since dropping below $50 in January, oil has rebounded strongly on a combination of supply worries and strong gasoline demand in the world’s biggest consumers the United States.
A sharp drawdown in U.S. gasoline stocks has kept prices aloft, with dealers fearing a squeeze on motor fuel supplies as peak summer demand looms.
U.S. gasoline was up 1.78 percent at $2.4033 a gallon.
“Given the current low level of gasoline inventories, GS Research believes that the motor gasoline price and crack risks remain skewed to the upside,” Goldman Sachs said.
Low production from U.S. refineries due to maintenance and unplanned repairs have cut the nation’s gasoline stocks nearly 15 percent since early February.