Oil firms to $97 as Pakistan tension mounts
Singapore, December 28, 2007
Oil rose for a fifth day to $97 a barrel, within sight of its record high after US crude stocks fell more sharply than expected, and geopolitical tensions mounted in Pakistan and northern Iraq.
US light, sweet crude oil for February delivery rose 41 cents to $97.03 a barrel by 0221 GMT, taking gains since Dec 20 to nearly $6 a barrel or over 6.5 per cent.
London Brent crude rose 23 cents to $95.01 a barrel.
Prices surged to a one-month high of $97.79 a barrel on Thursday -- within $1.50 of their all-time record -- after data showed US crude oil inventories fell 3.3 million barrels in the week to Dec. 21, three times more than forecast.
'The larger-than-anticipated crude draw, coupled with a sizeable decline in distillate inventories, sent the oil complex higher,' JP Morgan analysts wrote in a research note.
US crude stocks now stand at their lowest in nearly three years, despite a pick-up in imports. Stocks of distillates including heating oil fell by 2.8 million barrels, according to the US Energy Information Administration.
Prices have also been boosted by unsettling developments near the Middle East, source of a third of the world's crude oil.
Pakistani opposition leader Benazir Bhutto was assassinated on Thursday as she left an election rally, putting Jan 8 elections in doubt and plunging the country into one of the worst crises in its 60-year history.
While Pakistan is not a major oil producer and any unrest within its borders is unlikely to directly effect oil flows, dealers say the additional geopolitical uncertainty in the region has put an additional fear premium on prices.
That came just days after Turkey began raids on Kurdish guerilla targets in northern Iraq, which also raised the risk to regional supplies, although most of Iraq's crude exports flow via its southern ports.
Oil has soared more than 58 per cent since the start of the year, the biggest one-year gain since 1999, boosted by growing investor appetite for the commodities sector as the US dollar falls and as Opec maintains a tight grip on supplies.
Worries about the impact of the credit crisis on oil demand in top consumer the US and concerns over weaker-than-usual winter fuel demand due to balmy weather has barely slowed the rally that began at below $70 a barrel in mid-August, with prices now within sight of their record $99.29 on Nov 21. Reuters