Sun, Jul 02, 2006 - Page 10 News List

Oil prices climb to US$74 as gas supply fears mount

HOLIDAY BINGE With 35 million Americans due to hit the roads for the Fourth of July holiday, gas supply worries pushed world oil prices to levels seen in May

AFP , NEW YORK

Protesters hold signs and an empty gas can in front of the White House in Washington on Friday during a demonstration organized by the American Federation of Labor-Congress of Industrial Unions demanding government action against high gas prices.

PHOTO: AFP

World oil prices climbed toward US$74 per barrel on Friday due to jitters over motor fuel supplies before a long holiday weekend in the US, dealers said.

New York's main contract, light sweet crude for delivery next month, climbed US$0.41 to close at US$73.93 per barrel. The contract earlier hit US$74.15 -- the highest point since May 3.

In London on Friday, Brent North Sea crude for delivery next month surged US$0.64 cents to US$73.51 per barrel in electronic deals after earlier touching US$73.35, which was last seen on May 12.

The New York Stock Exchange closed early and will remain closed tomorrow and Tuesday, making a long weekend of Tuesday's Fourth of July celebrations, a key event in Americans' vacation and driving plans.

"The Independence Day holiday weekend in the US starts [on Saturday] and demand for gasoline should be very high, much higher in fact than last year according to some sources," Sucden analyst Sam Tilley said.

Some 35 million Americans are expected to take to the roadways over the weekend, putting severe strain on the country's stocks of gasoline or petrol.

US gasoline stocks are under pressure amid the ongoing peak-demand driving season.

"Oil prices are continuing to gain support [on Friday] from strong underlying US demand for gasoline where consumption levels are continuing to rise despite prices that are up over 20 percent year-on-year," added Barclays Capital analyst Kevin Norrish.

Fimat analysts agreed, saying "demand looks quite resilient with American drivers expected to take to the road in record numbers during the July 4th weekend."

Prices also were underpinned by the continued closure of a key shipping channel in Louisiana, which has limited output at three refineries, Fimat said.

Bill O'Grady of AG Edwards also noted that a spate of refinery problems and supply disruptions were "adding to the bullish tone of the market."

Oil prices extended gains following a report on Wednesday by the US Department of Energy showing steep falls in both gasoline and crude stockpiles.

Gasoline stocks in the US had fallen by one million barrels to 212.4 million in the week ended June 23, compared with market expectations of a rise of 450,000 barrels.

According to the DoE, demand for gasoline rose 1.2 percent in the week to 9.54 million barrels per day, matching a record high set in August last year.

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