Crude oil prices posted gains on Thursday, a day after plunging nearly $3, amid renewed concerns about gasoline shortages and supply disruption in Ecuador and Nigeria.
”We do not believe that the oil market has yet fully convinced itself that more than $60 is sustainable in terms of growth, and until that occurs, any move much higher is likely to be rather fleeting,” Paul Horsnell, head of energy research at Barclays Capital in London, wrote in a research note.
The front month September contract for light, sweet crude gained 26 cents to $63,51 a barrel on the New York Mercantile Exchange in midday European electronic trading. The contract slipped to a session low of $62,80 in earlier trading.
On Wednesday, the contract slid $2,83 to settle at $63,25, amid selling from hedge funds and other speculators after the market’s recent rally, which saw prices rise as high as $67,10 on Friday.
Gasoline was up less than half a cent at $1,8940 a gallon (3,8 litres), while heating oil gained nearly two cents to trade at $1,8000.
In London, October Brent on the International Petroleum Exchange was trading at $62,98 a barrel, up 42 cents.
Analysts said the sharp drop in oil prices in United States trading hours was a correction of a market many perceive as overbought.
Renewed concerns of supply shortages were sparked by Wednesday’s US midweek petroleum supply report showing a large decline in gasoline inventories.
”This is what is currently driving prices: fears of future energy shortages, which would now be capable of giving the world economy a considerable push downwards,” said John Kilduff, senior vice-president at US brokerage Fimat.
The US Department of Energy said the nation’s supply of gasoline fell by five million barrels in the week ending August 12, putting inventories at 198,1-million barrels, or 12% below last year. Crude oil inventories grew by 300 000 barrels last week to 321,1-million barrels, or 11% above year-ago levels.
The report is a yardstick for determining demand and usage levels from the world’s largest energy consumer.
But some analysts said earlier concerns about insufficient gasoline supplies, compounded by a spate of US refinery breakdowns, were easing as more refineries resumed operations and no new outages were reported this week.
Oil prices rose nearly $10 a barrel over the three weeks that ended on Friday, sending crude oil prices up 40% compared with a year ago — but still below the inflation-adjusted high of $90 a barrel set in 1980.
High demand, primarily from China and the US, has been blamed for limited excess capacity globally, which analysts said left little wriggle room in the event of a prolonged outage.
But the American Petroleum Institute reported on Wednesday that US oil demand fell 3% in July compared with the same month last year, while gasoline deliveries fell 0,8%, an indication of slowing demand.
Meanwhile, Ecuador’s government on Thursday declared a state of emergency in two Amazon provinces to quell protesters who have severely disrupted oil production to press for greater spending on infrastructure and social programmes.
Officials at state-run oil company Petroecuador said crude production has fallen 90%, from 202 500 barrels to 20 000 barrels, creating losses of about $12-million in revenue between Monday and Wednesday.
News of output disruptions at Shell’s Agbada flow station in Nigeria triggered by protests from villagers was also seen as a potential bullish factor. — Sapa-AP