Daily Times - 26/4/2006
Oil rose above $73 on Tuesday, halting a slide from last week’s record high, on renewed worries over Iran’s nuclear programme and a jump in demand in China, the world’s second-largest oil consumer.
Iran’s chief nuclear negotiator said his country would suspend ties with the UN’s nuclear watchdog if it were to be targeted by sanctions, as advocated by the United States.
US June crude futures were trading 40 cents higher at $73.73 a barrel, after sliding nearly 2.5 percent on Monday from the $75.35 record high struck Friday. London Brent crude was up 60 cents at $73.60.
“The market is reacting today as though oil at less than $74 a barrel is a bargain,” said Deborah White of SG CIB Commodities in Paris. “We’ve had some aggressive statements from Iran again, and seen some bullish statements on Chinese demand.”
China’s apparent demand for oil rose 6 percent in March from a year earlier, moving closer to market forecasts on support from a roaring economy and stockpiling in anticipation of fuel price increases.
The strongest increase since September means the country used 6.44 million barrels per day (bpd) in March, calculations based on official data showed.
“Risks that have been supporting the market remain unresolved and China’s strong demand will have impact on the market fundamentals,” said Hiroyuki Kitakata, director of commodities business at Barclays Capital in Tokyo.
US gasoline: Oil has hit record highs this year because of concern Iran’s dispute with the West could cut oil exports from the World’s fourth-largest producer, supply losses in Nigeria and a flow of investor money into oil and other commodities.
Traders remain concerned over US gasoline supply in summer when demand peaks for the fuel. US government data on Wednesday will likely show another drop in the nation’s gasoline stocks, according to analysts in a Reuters poll.
“US gasoline may be rattling people’s cages,” SG’s White said. “We’re going to see another steep draw. That, Nigeria and Iran are the market’s three hot buttons right now.”
Iranian chief nuclear negotiator Ali Larijani, speaking at a conference on nuclear issues in Tehran earlier on Tuesday, also said Iran would throw a cloak of secrecy over its nuclear programme if it was attacked militarily.
He was speaking before the UN nuclear watchdog, the International Atomic Energy Agency, reports to the UN Security Council on Friday on whether Iran has complied with their demands that Tehran halt uranium enrichment and answer IAEA queries on its nuclear work.
Iranian oil minister Kazem Vaziri sought to calm the market at the weekend by reiterating that the oil weapon was off the table in the nuclear row.
Tehran says its atomic programme is peaceful, while the US accuses Iran of seeking nuclear bombs.
Oil came under pressure earlier in the day after the Organization of the Petroleum Exporting Countries pledged to keep pumping at near maximum rates, with a daily production ceiling of 28 million barrels, at talks in Doha on Monday.
OPEC ministers said that tensions over Iran, Nigeria and other key oil-producing nations have added as much as $15 to the price of oil and that the cartel, the source of more than a third of world supply, was powerless to pull down high prices.