Oil hits new high over $73 on Iran
By Simon Webb
April 19, 2006
LONDON (Reuters) - Oil hit a new high above $73 a barrel on Wednesday on fears Iran's intensifying dispute with the West may hit oil supplies and after a sharp fall in U.S. gasoline stocks.
London's Brent crude was up 16 cents at $72.67 a barrel at 1449 GMT after peaking at a fresh record of $73.34.
U.S. gasoline stocks slumped 5.4 million barrels last week, government data released on Wednesday showed. That was a larger fall than the 2.5 million barrels expected among analysts polled by Reuters.
"The EIA (inventory) data are bullish in light of expectations," said Kyle Cooper, analyst at IAF Advisors in Houston. "There is nothing in this report that can put a damper on the current rally."
Gasoline prices have soared faster than crude since the start of April as inventories dwindle, while refiners run down stocks ahead of changes to more environmentally-friendly fuels in May.
Refinery maintenance has also eaten into stocks.
Brent has hit fresh records in each of the last seven sessions as the loss of a quarter of Nigerian oil supply has tightened European markets more than the U.S., where crude stocks are at their highest level for nearly eight years.
U.S. May crude oil futures fell 35 cents to $71 a barrel, after hitting a record of $71.79.
Tensions over Iran have fueled a $13 rally on Brent so far this year.
WAITING FOR SOMEONE TO BLINK
"It's like the Cuban Missile Crisis, we are just waiting for someone to blink," said Michael Coleman, managing director of Singapore-based hedge fund Aisling Analytics.
On Tuesday, the United States failed to secure international support for targeted sanctions against Iran and President George W. Bush refused to rule out nuclear strikes if diplomacy failed to curb the Islamic Republic's atomic program.
"All options are on the table. We want to solve this issue diplomatically and we're working hard to do so," Bush said.
The United States, which already enforces its own sweeping sanctions on Iran, wants the Security Council to be ready for strong diplomatic action.
The price of oil has trebled since the start of 2002 and is nearing the inflation-adjusted peaks above $80 a barrel reached in the early 1980s, just after the Iranian Revolution.
The high prices have sounded alarm bells in consuming nations fearful of an economic hit.
The International Monetary Fund said on Wednesday the impact of higher oil prices on the global economy was a growing concern. The IMF said in its semiannual World Economic Outlook that it was worried the full effects of the surge in energy prices had yet to be felt.
It called on U.S. officials to consider higher gasoline taxes to curb oil consumption in the world's largest energy consumer. The U.S. burns a quarter of the world's oil, but raising taxes is political anathema in Washington.
Ministers from the Organization of the Petroleum Exporting Countries (OPEC) will consult informally next week on the sidelines of an energy forum in Qatar, OPEC sources said.
Several OPEC ministers have said there is nothing more that the group can do to bring down oil prices, as it is already pumping near full tilt.
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