World oil prices climbed on Friday as a storm threatened Gulf of Mexico energy installations ahead of a long holiday weekend in the US, while US stockpiles remained tight.
New York's main futures contract, light sweet crude for delivery in October, jumped US$0.68 to close at US$74.04 per barrel.
It was the first time the contract has topped the US$74 mark since Aug. 6. Over the week, the price has climbed nearly US$3. The New York Mercantile Exchange will be closed tomorrow for the US Labor Day holiday.
In London, the price of Brent North Sea crude for October delivery rose US$0.79 to settle at US$72.69 per barrel.
"Anxiety is rising for domestic US oil and product supplies considering there is a potential storm threat on the horizon," Mike Fitzpatrick of MF Global said.
"The market is also facing a heavy fall maintenance schedule that will probably pinch supplies next month, just as they were in the spring," he added.
Oil prices were underpinned by a potential storm forming in the Atlantic which reignited fears that supply from Gulf of Mexico oil installations could be squeezed.
"Its calculated path still takes it to the eastern Caribbean, an area favorable for strengthening and historically a highway to the US or Mexican Gulf," Petromatrix analyst Olivier Jakob said.
Meanwhile, a weekly US inventory report released earlier this week continued to support oil futures. The figures showed that US gasoline supplies remain well below average and that crude fell by more than the market had expected.
"The situation in gasoline looks particularly alarming," Barclays Capital analysts said on Friday. "Demand has remained relentlessly strong, whereas production and imports have failed to keep up with growth in demand in the absence of the necessary price signals."
The Department of Energy said on Wednesday that US motor fuel inventories dived by 3.6 million barrels last week, sharper than the forecasted 2.5 million barrels.
Motor fuel inventories remain far below normal levels as refiners in the US have struggled to keep up during the peak demand of the holiday driving season, which began in May and wraps up this weekend with the Labor Day holiday.
Fitzpatrick said the market had largely brushed off a Petrologistics forecast that OPEC was likely to increase production by nearly 600,000 barrels per day in the four weeks to Sept. 15.
That "suggests the market is not only discounting the threat against demand, but sentiment is strong enough that participants are even discounting evidence of rising supply," he said.
OPEC will hold its next meeting on Sept. 11 in Vienna.
Oil traders also monitored wider financial markets to see if another round of risk aversion was on the way.
Oil and other commodity prices this month have tracked the stock markets, roiled by concerns about a global credit crunch linked to the US housing sector.
Weakness in wider financial markets over the past few weeks has triggered several bouts of risk aversion, which in turn has caused oil prices to fall as speculators liquidated risky investments.
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