Wednesday June 30, 7:15 am Eastern Time
Note: this article has a followup with more
information.
FOCUS-Oil targets 18-month highs
on U.S. stockdraw
LONDON, June 30 (Reuters) - Oil prices edged higher
again on Wednesday after another unexpected drop in
U.S. crude oil stocks and signs of growing demand for
gasoline set the market's sights on new 18-month highs.
London August Brent Blend futures jumped 21 cents to $17 a barrel after the American
Petroleum Institute (API) reported a near 500,000 barrel drop in U.S. crude stocks in the
week to June 25.
This was against expectations for a rise of some two million barrels and follows a big
and unexpected fall the previous week.
August Brent was now closing in on the $17.20 high seen two weeks ago, which was the
highest since December 1997.
''While the API report does not seem to have enough in to push crude out of its recent
range...the upward resistance at $17.20 is now tantalisingly close,'' said Lawrence
Eagles at GNI Research in his daily report.
While Brent could break through the $17.20 level and attract fresh buying from
institutional funds, Eagles was sceptical that there was enough short-term strength to
sustain a big push up.
The market was waiting for confirmation of the API data from the U.S. Energy
Department's Energy Information Administration's weekly inventory report due to be
released later on Wednesday.
The API report also showed a draw of more than one million barrels in U.S. gasoline
stocks which, while less than expected, showed demand cutting into the recent supply
glut.
An improving U.S. gasoline demand picture follows Tuesday's news that Mobil had shut
catalytic cracking operations at its Beaumont, Texas, plant for a week.
The market is sensitive to news of U.S. refinery disruptions which effect gasoline
supplies during the peak summer motoring season in the United States, which
consumes 40 percent of the world's gasoline supplies.
Oil also derived continued support from growing crude demand as European refiners
restored some operations cut last month.
Europe's biggest refiner, Royal Dutch/Shell, said on Tuesday it had eased restrictions
which cut crude throughput across the continent by 20 percent for most of May and June.
Shell was to decide soon on its refinery operations policy for July.
Shell's move follows a decision by BP Amoco/Mobil's European refinery joint venture to
restore maximum throughput after cuts over a number of weeks in response to poor
refining profits.
Brent crude has climbed more than $7 a barrel since briefly slipping below the $10 mark
in the middle of February, with the latest OPEC output cuts, in place since April, starting
to erode the surplus stockpiles that had weighed on the oil market.
(Note: this article is ''in progress''; there will likely be an update soon.)
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