Oil: Prices steady at US$75 on strong demand

NEW YORK - Oil held above US$75 a barrel on Thursday, a day after hitting record highs, after weekly US inventory data showed a rise in petrol stocks in spite of strong demand in the world's top energy consumer.

Petrol stocks in the United States, which had been expected to fall, rose by 700,000 barrels last week, a US government report said. But a 1.4 per cent gain in demand over the last four weeks compared with a year ago partially offset the supply build.

"Resilient demand underpins the market's fundamental strength," Antoine Halff of Fimat said in a research note.

US crude CLQ6 settled 5 cents lower at US$75.14 a barrel, while London Brent crude LCOQ6 settled 10 cents higher at US$74.08.

US crude hit a record high of US$75.40 on Wednesday, boosted in part by signs that US petrol prices, near US$3 a gallon at the pump, have yet to pinch the wallets of motorists in the United States.

Investment funds, a key driver of a four-year crude oil rally that began at US$20, remain convinced there is no end in sight to the bull market.

"It will be much more than US$100 before the bull market is over," billionaire US investor Jim Rogers told Reuters. He has predicted the current bull market has another 15 years to run.

Supply concerns raised by the dispute between key oil producer Iran and the West over Tehran's atomic ambitions, along with a partial loss of Nigerian supply, had helped drive prices to the previous record at US$75.35 in April.

Richard Batty, investment director at Standard Life Investments, said threats to supply were adding a premium of about US$15 to prices and predicted oil will stay in a US$55-US$75 a barrel range.

"Events suggest it will stay at that level," he told Reuters. "A lot of the upper part of that is about risk premium." Iran postponed a meeting on Wednesday with the European Union to discuss incentives to stop its uranium enrichment. They were now scheduled to meet in Brussels on Thursday and July 11.

Providing some relief from supply concerns, Opec's oil output rose to a seven-month high in June as Iraq began exporting crude from its northern fields after a break of almost a year, a Reuters survey found.

Crude production by the Organisation of the Petroleum Exporting Countries rose 240,000 barrels per day in June to 29.78 million bpd, the survey showed.

- REUTERS