Oil prices hit highest level since August

Crude futures hit US$70 a barrel for the first time in seven-and-a-half months yesterday, pushed higher by concerns over declining gasoline stocks in the US, supply disruptions in Nigeria and tension over Iran's nuclear program.

Light, sweet crude for delivery next month briefly touched US$70 a barrel before easing to US$69.85 a barrel in European trading -- up US$0.40 from Thursday's close. The Nymex was closed on Friday for the Good Friday holiday.

Post-Katrina high

The last time crude futures surpassed US$70 a barrel was on Aug. 30 when they traded at a record US$70.85 a barrel, after Hurricane Katrina struck the US Gulf coast.

At the ICE Futures exchange in London, Brent crude oil futures touched a new high above US$71 a barrel, rising US$0.48 to US$71.05 a barrel for June delivery.

The contract earlier spiked to US$71.40 a barrel -- the highest ever traded for a front-month contract.

Brent previous high was reached on April 13 when it touched US$70.99 in intraday trading.

"Gasoline inventories in the US continue to be an issue in the market because last week's inventory report showed a stock decline as we approach the summer driving season," said Victor Shum, an energy analyst at Purvin & Gertz in Singapore.

Heating prices rose US$0.0114 to US$1.9973 a gallon (3.8 liters) while gasoline futures jumped US$0.0121 to US$2.1185 a gallon -- a level not reached since early last September.

The market was also driven by the disruption of Nigerian crude supplies by rebels and the possibility of Iranian oil exports being halted due to political tension.

Cabinet rebuffs CPC

Facing the rising costs, Taiwan's state-run Chinese Petroleum Corp reportedly proposed increasing wholesale gasoline prices by NT$2.5 per liter, but this was rejected by the Cabinet over inflation concerns.

Government Information Office Minister and Cabinet Spokesman Cheng Wen-tsang (鄭文燦) said yesterday that the Cabinet's primary concern is inflation, but that it will still let the "market mechanism" decide gas prices as well as many other utility prices.

Additional report by Jimmy Chuang