Oil prices hit $74 a barrel

Oil jumped to a record high above $74 a barrel on Thursday after a steep drop in US gasoline inventories fuelled fears of tight summer supplies at a time of growing anxiety over Iran's exports.

    Dwindling US gasoline stocks have triggered fresh worries

    The United States on Wednesday reported a larger-than-expected drop in gasoline inventories of more than 5 million barrels, adding to concern created by the shutdown of almost a quarter of Nigeria's oil output and the row over Iran's nuclear programme.
       
    "We've gone from comfortable US gasoline stocks to average and seem to be heading very clearly toward the low of the range," said Deborah White of SG SIB Commodities in Paris. "The market is worried about that."
      
    London's Brent crude climbed as high as $74.22 a barrel, its eighth consecutive session to mark a new peak. It was trading down 3 cents at $73.70 a barrel by 1132 GMT.
       
    US May crude oil futures were down 3 cents to $72.14, hitting an all-time high of $72.49 earlier.
       
    Gasoline stocks in the US fell as demand averaged over 9.1 million barrels per day (bpd), 0.8% more than a year earlier, the US Energy Information Administration (EIA) said.
       
    "It's all about gasoline and it has been since January," said US consultant PFC Energy in a report, adding that stocks are at the bottom of a five-year range in terms of days of supply.
       
    Strong demand

    Oil's surge is part of a broader rally in commodities as investors seek to beat the returns available in equities or bonds. Gold hit a 25-year peak, silver reached a new 23-year high and platinum soared to a record on Thursday.
       
    "We continue to see fund action," SG's White said. "They are coming in across the basket of commodities."

    "We've gone from comfortable US gasoline stocks to average and seem to be heading very clearly toward the low of the range," 

    Deborah White,
    SG SIB Commodities

    Oil prices have nearly tripled since 2002 and analysts see few signs of the rally coming to a halt as levels push closer to 1980 inflation-adjusted peak of $82 a barrel, setting alarm bells ringing in consuming nations.
       
    Record oil costs so far have yet to derail growth in oil demand or the world economy.
       
    China, the world's second-largest oil consumer, said on Thursday that its gross domestic product in the first quarter had grown 10.2% from a year earlier, marking a pick-up from 9.9% in the fourth quarter.
       
    A day earlier, the International Monetary Fund hiked its 2006 forecast for global growth to 4.9%, the best since 1976 apart from 2004.

    Iran worries
      
    Tension over Iran's resolve to expand its nuclear work kept prices high as analysts fear the dispute could worsen, cutting shipments from the world's fourth-largest oil exporter. Iran has said it does not plan to cut shipments.

    The country's oil minister said on Thursday that the OPEC member was happy with high oil prices, displaying the Islamic republic's increasingly hawkish stance.
      
    "Naturally Iran is happy," Kazem Vaziri-Hamaneh told reporters. "High prices make any supplier happy."
       
    On Wednesday, Mahmoud Ahmadinejad, the Iranian president, was quoted by the official IRNA news agency as saying oil had not yet reached its real value despite the recent price surge.
       
    The perceived threat to Iranian supply comes on top of a disruption in Nigeria, where attacks by militants have cut the country's output by almost a quarter.

    SOURCE: Reuters


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