World oil prices swirled higher on Wednesday as traders looked to stormy weather that could threaten energy facilities in the United States Gulf of Mexico. Market participants were also awaiting the latest update on crude reserves in the US.
The price of London’s Brent North Sea crude for September delivery added 27 cents to $70,78 per barrel. New York’s main futures contract, light sweet crude for delivery in September, gained 18 cents to $72,56 per barrel.
Crude futures had ended higher on Tuesday after traders eyed potential damage to US oil facilities amid a tropical storm building in the Atlantic Ocean that experts say could turn into a hurricane by the end of the week.
“Providing support to prices [on Wednesday] is evidence that the 2007 Atlantic hurricane season has finally started with markets closely watching the developments of Tropical Storm Dean and the forming of Depression 5 in the Gulf of Mexico,” said Barclays Capital analyst Kevin Norrish.
“While there is no guarantee at all that the two systems will develop into damaging hurricanes, they certainly can bear an important psychological impact, serving as a tangible reminder of what is forecast to be a very active hurricane season.”
The US Atlantic hurricane season began on June 1, but experts point out that cyclonic activity typically peaks between August and October.
Later on Wednesday, meanwhile, traders will examine the latest weekly snapshot on US energy stockpiles. London analysts forecast that US crude inventories will have fallen by 2,5-million barrels in the week ending August 10.
American petrol reserves are predicted to have dropped by 750 000 barrels.
Oil prices had fallen in intra-day trade on Tuesday as equity markets in Europe and the US tumbled owing to widespread concerns over the slumping US housing market. That stoked fears over the strength of global economic growth — and crude oil demand.
But news of Tropical Storm Dean sent prices back into positive territory in late trade.
“The oil market went from worrying about the swirling financial storm to worrying about the development of a potential tropical storm,” said Alaron analyst Phil Flynn. “Any storm that slows refining and production will not be welcome.”
The US government’s Climate Prediction Centre predicted last week that between 13 and 16 tropical storms were expected to form in the Atlantic basin this year, with seven to nine becoming hurricanes. — AFP