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Oil surges 3 percent as U.S. gasoline stocks tighten |
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Written by Staff Writer
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Mar 22, 2007 at 03:27 PM |
Oil jumped more than 3 percent to over $61 on Thursday as a fall in U.S. gasoline stocks fueled concerns of tight supplies ahead of the summer driving season in the world's top consumer. U.S. crude settled up $2.08 to $61.69 a barrel, while Brent crude rose $1.74 to $62.51 a barrel.
Refinery snags, early maintenance and robust demand growth in the United States have drained gasoline stocks to 7 percent below early February levels, with inventories off 3.4 million barrels last week.
But some analysts say worries of a U.S. summer gasoline crunch may prove unfounded as rebounding refinery production and imports from Europe should ensure adequate supplies.
A late Wednesday stock market rise also supported oil.
"There was the monster rally in the stock market after the NYMEX session had closed on Wednesday," said Tim Evans, energy analyst at Citigroup Global Markets. "And Thursday often has the market taking a second look at the (inventory) numbers ... the product draws were significant."
While gasoline's buoyancy has helped boost crude prices, analysts say a supply cut of 1.7 million barrels a day by the Organization of the Petroleum Exporting Countries (OPEC) is also underpinning the market
"OPEC has regained an element of control over the market," said Tony Dolphin, economist at Henderson Global Investors.
He said lower-than-expected supplies from outside OPEC, particularly from Russia, plus a reasonable level of production discipline within OPEC, seemed to be enough to hold prices around $60 for now.
U.S. crude has traded between $58 and $62 a barrel since early February, a range considered acceptable by OPEC.
"Prices today we believe are reasonable. We hope these prices will stay in the level where they are, between $50-$60 a barrel," OPEC research head Hasan Qabazard said.
OPEC, source of more than a third of the world's oil, agreed last week to keep current crude supply curbs in place.
But OPEC ministers have not ruled out further action on supply before September, their next scheduled meeting.
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