Oil prices rise past $87 in Asia as volatile trade continues

Oil prices rise past $87 in Asia as volatile trade continues
AP
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First Published: Thu, Oct 18 2007. 03 21 PM IST
Updated: Thu, Oct 18 2007. 03 21 PM IST
Bangkok: Oil prices rose in Asia on 18 October as futures were whipped around by inventory outlooks and worries over a possible attack by Turkey on Kurdish rebels in northern Iraq.
“Short-covering” could be behind the late rise in Asia after the plunge from Wednesday’s record, said Tetsu Emori, commodity markets fund manager at ASTMAX Futures Co. in Tokyo. Short-covering refers to buying by investors who had bet prices would fall.
The rise could also be due to “concerns about the tensions between Turkey and Iraq and possible disruption of oil from Turkey’s port,” Emori said.
Some Iraqi oil is piped to the Turkish export terminal of Ceyhan and traders worry tension between Turkey and Iraq would disrupt those deliveries. While exports of crude from Kirkuk to Ceyhan have been sporadic since the US-led invasion of Iraq in 2003, oil has been flowing the past two months, and in recent days was being shipped at a rate of about 500,000 barrels a day, according to Dow Jones Newswires.
On Wednesday, though, unexpectedly large gains in US crude oil and gasoline inventories won the day over news that Turkey’s parliament approved a government plan to attack Kurdish rebels in northern Iraq.
Morning
Bangkok: Oil prices dipped in Asian trading on 18 October but held above $87 a barrel after a US inventory report showing larger than expected fuel stocks pulled crude futures back from a new trading record.
Light, sweet crude for November delivery fell 9 cents to $87.31 a barrel in Asian electronic trading on the New York Mercantile Exchange by midmorning in Singapore.
The Nymex crude contract lost 21 cents to settle at $87.40 a barrel Wednesday in the US after trading at a record US$89 a barrel.
The unexpectedly large gains in US crude oil and gasoline inventories won the day over news that Turkey’s parliament approved a government plan to attack Kurdish rebels in northern Iraq and word of an explosion at a small refinery in Montana.
The US Energy Department’s weekly inventory report also countered previous perceptions that oil supplies are falling and demand is growing, analysts said. Many argue that speculative investing is the real culprit behind oil’s rally over the last week.
Supply and demand fundamentals do not support prices near $90 a barrel, they say.
Also, despite the vote of approval by the parliament, Turkey’s government said a move into Iraq isn’t imminent, and a Turkish incursion would have minimal impact on Iraqi oil supplies, analysts said.
The Energy Information Administration reported that crude inventories rose 1.8 million barrels during the week ended 12 October, more than the 1 million barrel increase analysts surveyed by Dow Jones Newswires had expected on average.
The EIA also said gasoline supplies rose 2.8 million barrels last week, nearly triple analyst expectations for a 1 million barrel increase.
Distillates, which include heating oil and diesel fuel, rose 1 million barrels last week, the EIA said, while analysts had predicted a fall of 400,000 barrels.
December Brent crude fell 28 cents to $82.85 a barrel on the ICE futures exchange in London.
Nymex heating oil futures lost 0.46 cent to $2.3143 a gallon (3.8 liters) while gasoline prices added 0.20 cent to $2.1486 a gallon. November natural gas futures fell 4.8 cents to $7.410 per 1,000 cubic feet.
The EIA also reported that US refinery activity fell last week by 0.5 percentage point to 87.3% of capacity. Analysts had expected refinery utilization to grow by 0.4 percentage point.
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First Published: Thu, Oct 18 2007. 03 21 PM IST
More Topics: Oil | Crude | Prices | Gasoline | Turkey |