Oil prices rise on Chinese demand, Iraq turbulence Reuters News Service
NEW YORK - Oil prices rose today, lifted by strong global demand paced by China's booming economy and worries about oil security amid growing violence in Iraq, analysts said.
"We're surging off the IEA report, which had a bullish outlook in terms of global demand," said Marshall Steeves, a market analyst at Refco LLC.
At the same time, another strong rise in gasoline futures buoyed the overall energy market, Steeves said.
May gasoline futures in New York hit an all-time high of $1.1830 a gallon on Monday, as record high prices at the pump did not appear to deter U.S. drivers from filling their tanks, traders said.
Rising Chinese demand and Iraqi jitters overshadowed news that OPEC kingpin Saudi Arabia was increasing some Asian exports in May because many of its refineries were undergoing maintenance, and that the Saudis will keep May crude supplies to U.S. refiners steady.
Light U.S. crude on the New York Mercantile Exchange was 62 cents a barrel higher at $37.76 as trading resumed after a three-day Easter weekend. It ended overnight ACCESS trading 24 cents higher at $37.38.
The International Petroleum Exchange in London, where Brent crude futures are traded, was closed for Easter Monday.
A report Friday from the Paris-based International Energy Agency said growth in Chinese oil demand continued to surpass expectations.
The International Petroleum Exchange raised its estimate of Chinese oil demand in the first quarter by 180,000 barrels per day to a record 6.14 million bpd, an 18 percent increase from the same period last year.
Crude imports by China, the world's second largest oil consumer, soared 35.7 percent year on year in the first quarter of the year, the official Xinhua news agency said on Monday.
The soaring Asian demand, a recovering U.S. economy and a steady European market offset Friday's forecast by the IEA that the 10 OPEC members bound by quotas showed no signs of tightening compliance in March and appear to remain well in excess of the new quotas in April.
Oil prices rallied last week after news that U.S. commercial crude inventories fell in the week to April 2, charting an percent rise on the holiday-shortened week.
Traders also talked of the market adding a security premium as a result of the violence in Iraq.
U.S., Japanese and Chinese civilians in Iraq have been kidnapped by insurgents in recent days, even as the U.S.-led coalition attempts to quell resistance that flared up in Falluja and other cities.
The lack of control by the U.S.-led occupation renews uncertainty about Iraq's ability to bring oil exports back to pre-war levels.
"I think higher prices in ACCESS represented an increase in the security premium," said Mike Fitzpatrick, an analyst at Fimat USA.
OPEC ministers agreed on March 31 to keep at least the cosmetic lowering of its production quota by 1 million bpd from April 1.
With OPEC's reference crude oil basket price up at $32.37 as of Thursday, the same day NYMEX crude tacked on nearly $1, it is not difficult to see why cartel members are tempted to produce over quota.
Three Japanese refiners confirmed they had been given notice of increased supplies from Saudi Arabia in May, while U.S. customers of Saudi crude said they were told they will receive the same amount in May as they did in April.