Oil prices pause within sight of $120

World oil prices paused within sight of the $120 level on Thursday after a mixed report on United States energy stockpiles, dealers said.

In Asian afternoon trading, New York’s main oil futures contract, light sweet crude for delivery in June, slipped 25 cents to $118,05 per barrel.

The benchmark contract closed at $118,30 on Wednesday at the New York Mercantile Exchange.

The May contract struck a record high of $119,90 before expiring on Tuesday.

Brent North Sea crude for June delivery dropped 18 cents to $116,28 a barrel, after settling at $116,46 on Wednesday in London. It touched an intraday peak of $116,75 a day earlier.

After coming so close, a further rise to $120 is possible, said David Moore, a commodity strategist at the Commonwealth Bank of Australia in Sydney.

The US government’s Energy Information Administration (EIA) said on Wednesday that American petrol reserves sank by 3,2-million barrels in the week ending April 18.

That was steeper than analysts’ consensus forecasts for a drop of 2-million barrels.

Traders are focused on gasoline supplies ahead of the peak demand season that starts in May when many Americans take to their cars for summer holidays.

Crude oil stockpiles grew by 2,4-million barrels, EIA said, which was better than market expectations for a gain of 1,5-million.

“The inventories data was overall pretty bullish,” said Dave Ernsberger, Asia director of global energy information provider Platts, in Singapore.

Moore said the EIA report contained “mixed messages” but added that prices are also influenced by a number of supply-side worries.

“Current pricing indicates some underlying tightness in the market,” he said.

Phil Flynn at Alaron Trading said earlier that traders hesitated after futures failed to break through the symbolic level of $120 a barrel, easing some fervour.

“After the market had built up all this bullish frenzy it’s almost like the price objective of $120 a barrel seemed to matter more than the fundamentals,” he said.

A weakening US dollar, supply worries and the reluctance of the Organisation of the Petroleum Exporting Countries to increase output contributed to a surge that saw oil prices break a series of records over the past several days, analysts said. — AFP

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