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17 Apr 2008 13:17
Oil set a record above $115 a barrel on Thursday as a drop in United States gasoline inventories raised concern of tighter supply and a weak dollar boosted investor demand for commodities.
A US government report on Wednesday showed a surprise drop in crude inventories and a larger-than-expected decline in stocks of petrol. Demand for fuel usually peaks in the summer.
“The helpful thing for the market is the further erosion in product stocks,” said Christopher Bellew, senior vice-president at Bache Commodities.
“Technically, the market still looks bullish.”
US crude set a record of $115,54 a barrel and by 10.51am GMT was trading at $114,92, down one cent.
Petrol stocks in the US fell by 5,5-million barrels in the latest week, the US Energy Information Administration said, more than the 1,8-million-barrel decline analysts had expected.
“Summer driving season is approaching. And even in a recessionary economy, seasonal gasoline demand will pick up, which adds to stress on the global oil supply chain,” said Jan Stuart at UBS. “But before we get there, the stress already put on to the supply chain globally by middle distillate demand and supply dynamics is not still abating.”
London’s gas oil, the benchmark for heating oil and diesel in Europe, set the pace for crude oil and refined product futures, gaining 0,7% to $1 052 a tonne.
In the latest indication of strong demand for middle distillates, China’s top refiners were set to extend high imports into a sixth straight month.
PetroChina, China’s second-largest refiner, has bought 300 000 tonnes of gas oil for May, traders said.
The weakness of the dollar continued to attract investors into commodities to hedge against inflation and bet oil’s rally would help compensate for the shrinking value of dollar assets in their portfolios.
The euro hit a record high against the dollar on Thursday.—Reuters
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