Oil prices move higher ahead of data
LONDON: Oil prices moved higher on Thursday, recovering some of the week’s sharp losses ahead of US data expected to show heavy falls in crude and product stocks due to disruption from Hurricane Katrina.
US light crude rose 54 cents to $64.91 a barrel by 0940 GMT, after plunging $1.59 on Wednesday. The market has fallen 8 percent from a record $70.85 last week, after industrialised nations began to tap emergency reserves.
London Brent crude rose 74 cents to $63.63 a barrel.
Signs that the US economy may be able to weather the effects of Katrina also encouraged buying. Goldman Sachs is retaining its four percent forecast for global GDP growth for 2005 and 2006 despite many and growing risks.
Oil dealers are looking to US government data on petroleum stocks due later on Thursday for further direction on the damage to the US oil industry, after the storm rampaged through the Gulf of Mexico last week. Analysts surveyed by Reuters forecast a 6.4 million-barrel drop in weekly crude stocks, which would still leave them well above year-ago levels. The figures come a day later than usual because of a US holiday.
Gasoline stocks were expected to fall by 6.2 million barrels and distillate fuels including diesel and heating oil by 2.6 million, as the hurricane forced the domestic industry to draw heavily on inventories.
“We will see the bullish stats, which will show the effects of the hurricane on US crude and product stockpiles, so I believe prices will rise from here,” said Naohiro Niimura, of Mizuho Corporate Bank. Katrina shut most of US production in the Gulf of Mexico, stopped offloading of imports at the country’s only port that can handle supertankers, and curtailed output at nearly two dozen refineries.
Three of eight refineries completely shut by Katrina were back in operation, while offshore oil production has recovered to 43 percent of the region’s capacity. Refiners have until Friday to submit bids for 30 million barrels of crude oil offered from the US government Strategic Petroleum Reserve (SPR).
This accounts for half of a co-ordinated release of 2 million barrels per day for 30 days in emergency stocks by the International Energy Agency, energy watchdog for 26 industrialised nations. The IEA said on Wednesday that the rescue plan contained 1.289 million bpd of crude and 683,000 bpd of products, which would comprise 369,000 bpd of gasoline, 276,000 bpd of middle distillates and 38,000 bpd of heavy fuel oil. reuters