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Oil prices gain after unexpected fall in US inventories
3/29/2006
SINGAPORE, Mar 23 (AFP): Oil prices rallied in Asian trading today on news that US crude stockpiles unexpectedly fell last week, dealers said.
New York's main contract, light sweet crude for delivery in May, was up 57 cents to 62.34 dollars a barrel from its close of 61.77 dollars in the United States, where it fell 57 cents.
US crude oil inventories fell 1.3 million barrels in the week to March 17 to 338.6 million, compared with forecasts for a rise of 2.8 million barrels.
Although it was the first time US crude supplies had fallen since early February, they were still nearly nine per cent above their levels a year ago.
"The data was generally friendly (for prices) as crude oil unexpectedly declined," AG Edwards analyst Bill O'Grady said.
Another factor adding uncertainty into the US market is the conversion from Methyl Tertiary Butyl Ether (MTBE) to ethanol by US refineries this May.
MTBE is currently blended with gasoline to help increase its oxygen content but will be phased out in May because of potential health and environmental risks.
The impact of the change will be take on a sharper focus as the summer driving season approaches, with analysts saying US motorists are likely to face a fresh spike in fuel prices.
Adding support for prices are ongoing tensions in Nigeria and Iran threatening global supply. Militant unrest in Nigeria last week saw the nation's total output cut 25 per cent.
After two weeks of talks, the UN Security Council has been unable to agree on a Franco-British statement that aims to reinforce demands by the International Atomic Energy Agency (IAEA) that Iran halt activities including uranium enrichment which could aid weapons development.
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