Oil Sets 10-Month High Above $73
Oil set a 10-month high above $73 a barrel on Wednesday, supported by low U.S. fuel inventories and expectations of strong gasoline demand in the world's top consumer.
U.S. gasoline inventories, which remain below those of a year earlier, probably rose by just 300,000 barrels last week, according to a Reuters poll of analysts. Demand is as strong as ever.
"Despite where prices are at the moment, there is no indication that demand is tapering off at the pump," said Andrew Harrington, commodities analyst from ANZ Bank in Australia.
U.S. light, sweet crude for August delivery (delayed) fell, as did London Brent crude (delayed).
Brent, which has rallied from around $50 a barrel in January, hit $73.10 on Tuesday, the highest since Aug. 25, 2006.
The New York Mercantile Exchange trading floor will be shut on Wednesday because of the U.S. Independence Day holiday.
Electronic trade remains open.
U.S. travel group AAA predicted last week that a record 41.4 million Americans would hit the roads for Fourth of July travel, up 0.8% from last year despite near-record high pump prices.
The U.S. Energy Information Administration's latest snapshot of supplies will be delayed to Thursday because of Wednesday's holiday. Crude stockpiles are expected to fall by 300,000 barrels.
While crude inventories are at a nine-year high, some analysts expect them to fall further in coming weeks as refiners process more crude while OPEC producers keep a lid on output.
Violence in Nigeria that has cut output and political tension over fellow OPEC member Iran's nuclear program have contributed to oil's rally this year. The rally may have further to run, say analysts.
"The strong upwards momentum in the oil market remains in place," said Barclays Capital in a report. "Tightening fundamentals are combining with a general positive sentiment in the market, keeping prices well underpinned."
Gunmen attacked a Shell oil rig in the Niger Delta in southern Nigeria on Wednesday and kidnapped five expatriates, police and security sources said.
This came as the rebel Movement for the Emancipation of the Niger Delta (MEND), responsible for most of the attacks on the country's oil industry, called off a one-month truce.
A MEND spokesman said the group was not involved in the overnight raid on the Royal Dutch Shell rig. Shell said there was no impact on oil output from the incident.
Analysts said some traders may be applying a bigger risk premium to prices following Venezuela's ouster of U.S. oil giants Exxon Mobil and ConocoPhillips and security concerns in the U.K.