OIL PRICES extended a three-day rally to over $73 a barrel yesterday on hopes for a recovery in world energy demand and worries refinery shutdowns could tighten gasoline supplies heading into the US summer driving season.
The International Energy Agency (IEA) said it revised its outlook for global oil demand higher for the first time since August, two days after the US government’s energy forecaster did the same.
“These revisions do not necessarily imply the beginnings of a global economic recovery, and may only signal the bottoming out of the recession,” the adviser to 28 industrialised nations said in its report.
US crude rose $1.90 to $73.23 a barrel by the close of London business, the highest price since October 21st.
London Brent crude gained $1.42 to $72.22.
Olivier Jakob, oil analyst at Petromatrix, said the markets were now in a phase of identifying signs of economic recovery and that the IEA report “will likely be taken as an additional green shoot”.
Meanwhile, US data showing an increase in retail sales in May and a slowdown in weekly jobless claims reinforced perceptions that deterioration of the world’s top economy was easing – pushing up stocks on Wall Street.
Earlier in the day, data from China showed oil imports into the world’s second biggest energy user rose 5.5 per cent in May compared to the previous year, hitting the second-highest volume on record.
Oil dealers said news that Valero will shut its refinery on the Caribbean island of Aruba because of weak profit margins encouraged oil’s rally by intensifying concern fuel supplies could tighten when Americans hit the roads this summer.
The US has also been hit by a spate of unplanned refinery outages in recent weeks.
These include fires at Sunoco’s plant in Marcus Hook, Pennsylvania, and Flint Hills’ plant in Corpus Christi, Texas.
Oil prices have risen about 7 per cent in three days and have more than doubled since the depths near $30 plumbed this winter, aided in part by worries Opec production curbs would dig into world stockpiles as the economy recovers.
Opec members have agreed to cut 4.2 million barrels per day of output since last autumn in an attempt to counteract sliding prices and soft world demand. – (Reuters)
