Oil Prices Up on Tight Supplies, Bombings
Reuters
Oil Prices Up on Tight Supplies, Bombings
Tuesday May 20, 3:38 pm ET
NEW YORK (Reuters) - Oil prices rose on Tuesday ahead of U.S. government data expected to show just a small increase in tight fuel supplies as peak summer gasoline demand nears.
A spate of suicide bombings across the Middle East has stemmed a 25 percent slide since mid-March, as dealers see renewed risks in the region that supplies 40 percent of world oil exports.
Saudi Arabia's Ambassador to Washington, Prince Bandar bin Sultan, said he believed the suicide bombers who struck Riyadh last week were planning a much bigger operation. The United States and Britain have closed their embassies in the kingdom.
U.S. light, sweet crude futures for July delivery edged up 12 cents at $28.41 a barrel. The expiring June contract rose 45 cents to settle $29.28. In London, benchmark Brent was up 4 cents at $25.69 a barrel.
"A new tension premium may be entering the oil price complex," said Standard Bank in a weekly report, referring to the spate of bombings. "Such a premium can be made to stick at the moment because crude oil stocks remain low."
A first-quarter surge in production by the OPEC cartel has failed to rebuild U.S. inventories as much as expected. Crude stocks are running 12 percent below last year's levels.
Analysts surveyed by Reuters forecast that U.S. government petroleum data due out on Wednesday would show that crude oil and gasoline stocks rose only modestly last week.
Global supplies are being capped by the lack of exports from Iraq, which once commanded a 4 percent share of global supply, but has not shipped oil since mid-March.
Iraq's oil production has also recovered more slowly than expected because of looting and damage to oil fields.
The United Nations Security Council is still wrangling over a new legal framework for Iraq to sell oil. The United States will press for a vote this week on its resolution to lift sanctions altogether.
The continued delays to Iraqi supply will take some of the pressure off the Organization of the Petroleum Exporting Countries to cut production further at its next meeting in Qatar on June 11. |
