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SINGAPORE - Oil prices held above US$65 today, after rebounding on disruptions to Nigerian supply, forecasts of stronger second-quarter demand and a harsh hurricane season in the United States.
London Brent crude currently seen as more representative of the global market than US prices, was up 6 cents at US$65.60 a barrel by 0343 GMT, after a gain of US$1.10 yesterday that broke a six-day losing streak.
US crude for June delivery was down 7 cents a barrel to US$62.19.
"The market is up on the situation in Nigeria and the hurricane forecasts for now, but petrol in the US is still the main driver," said Mitsubishi Corp.'s Tony Nunan.
In Nigeria, rebels blew up three oil pipelines, forcing Italian oil giant Eni to halt production of 150,000 barrels per day (bpd). Militant attacks have now shut about 28 per cent of output from the world's eighth-largest exporter.
Fuelling bullish sentiment, the US government raised its forecast for global demand in the second quarter to 84.6 million bpd, up 400,000 bpd from its previous forecast, on rising demand from the world's two largest consumers, China and the US
"Pump prices are already at US$3 but the impact on consumers doesn't seem to be felt as the highways are still jam-packed and people are driving longer distances," said Nunan.
Traders are looking ahead to US inventory data due later on Wednesday for the latest snapshot on demand strength, expected to to show a petrol stockbuild of 300,000 barrels last week, following 12 weeks of draws, a Reuters poll found
Crude stocks were seen rising 400,000 barrels, analysts said.
Nunan said an expected increase in US refinery production when plants return from maintenance will boost petrol inventories and keep a lid on prices unless major supply disruptions occur.
Two weather forecasters from AccuWeather and Colorado State University said there is an above-average chance that a hurricane will hit the US Gulf Coast this year, as in 2005 when storms knocked out a swathe of the country's oil platforms and coastal refineries and pushed oil prices to then-record highs.
Worries over Iran's nuclear dispute with the West have also been supportive for oil markets this year, with major powers set to discuss on Wednesday imposing tougher UN sanctions against Iran unless it halts uranium enrichment work.
For the longer-term, a US Senate committee approved a bill on Tuesday that would make automakers sharply boost the fuel efficiency of vehicles.
The Senate bill, proponents say, would save 2.1 million barrels of petrol and other auto fuel per day by 2025. That is roughly the amount of refined products the US imports now.
- REUTERS
