Oil touches $97 after decline in US crude, Bhutto assassination

Oil touches $97 after decline in US crude, Bhutto assassination

Singapore: Oil prices rose Friday after larger-than-expected declines in US crude inventories and on heightened geopolitical concerns following the assassination of Pakistani opposition leader Benazir Bhutto.

Pakistani opposition politician Nawaz Sharif vowed to boycott parliamentary elections on 8 January and demanded that President Pervez Musharraf resign immediately.

Bhutto’s assassination “adds another level of uncertainty to the outlook for the region," said David Moore, a commodity strategist at the Commonwealth Bank of Australia in Sydney.

Light, sweet crude for February delivery added 21 cents to $96.83 a barrel in Asian electronic trading on the New York Mercantile Exchange, midmorning in Singapore.

The contract rose 65 cents to settle at $96.62 a barrel on Thursday.

In its weekly inventory report, the US Energy Department’s Energy Information Administration said oil inventories fell by 3.3 million barrels last week, more than double the 1.3 million barrel decline analysts expected.

Inventories of distillates, which include heating oil and diesel fuel, fell by 2.8 million barrels, much more than the expected drop of 800,000 barrels.

Crude and heating oil stockpiles have declined more than expected for several weeks running, exacerbating a perception that supplies may be inadequate to meet winter demand.

Gasoline supplies rose by 700,000 barrels, about half the 1.4 million barrel increase analysts had expected. Refinery activity rose by 0.3 percentage point last week to 88.1 percent of capacity. Analysts had expected an increase of 0.6 percentage point.

Earlier in the week, oil prices rose when attacks by Turkish forces on Kurdish rebels in northern Iraq raised concerns about Iraqi oil exports.

“Oil is concerned that this violence may boil over and is especially worried that somehow this could lead to a disruption of supply from their northern pipelines. Yet despite those fears it hasn’t happened yet," wrote Phil Flynn, an analyst with Alaron Trading Corp. in Chicago, in a research note.

Heating oil futures added 0.67 cent to $2.6825 a gallon (3.8 litres) while gasoline prices rose 0.22 cent to $2.5214 a gallon.

In London, Brent crude rose 33 cents to $95.11 a barrel on the ICE Futures exchange.