Oil Prices Supported by 'Concern' about Tighter Market
Oil on Friday was supported by "concern" that rising demand will strain supplies already thinned by U.S. refinery glitches and output disruptions in Africa.
U.S. light, sweet crude (delayed) for August, which expires at the end of New York trading on Friday, dropped 7 cents to $75.85.
London Brent crude (delayed) for September was up 1 cent at $77.68 by noon trading. Brent hit a record high of $78.65 last August. "We should end the week on a stronger note, as there seems little in terms of news that could prompt any meaningful selling," MF Global said in its daily energy report.
The market has rallied to within sight of its all-time peak, spurred by a surprise fall in U.S. gasoline inventories, accelerating economic growth in China and a brief supply outage in OPEC member Angola.
"Oil demand seems to be robust. There is a feeling that the market will become tighter and there is concern about prompt supplies," said Tony Nunan, risk management executive at Tokyo-based Mitsubishi.
Economic growth in China, the world's second-largest consumer, accelerated to 11.9% in the second quarter, an 11-year, 6-month high; China's crude imports in June rose 20% from a year ago.
Other Asian economies are also proving resilient to surging energy prices. Crude imports by South Korea, the world's fourth-largest buyer, rose 3.8% from a year ago in June.
Rising demand in the United States and a spate of refinery outages have drained inventories in the world's top consumer.
Gasoline stockpiles, which were expected by analysts to rise, instead fell by 2.3 million barrels in the week to July 13, a government report said on Wednesday.
Prices rose on Thursday after Total cut output by half at its 220,000-barrel-per-day Dalia field in Angola. Total said on Friday it had lifted a force majeure on exports and supply should return quickly to normal.
The outage added to supply losses from Africa. In Nigeria, almost 550,000 bpd, or 18% of the country's oil capacity, remains shut because of attacks on the country's oil industry.
In spite of the disruptions, the Organization of the Petroleum Exporting Countries has yet to relax supply curbs in place since last November and analysts do not expect the group to do so any time soon.