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Concern over two tropical storms drives oil prices up

Indian kerosene dealers wait for supplies outside a petroleum company in Mumbai on Tuesday. India's federal Cabinet last month raised gasoline and diesel prices by as much as 7 percent to offset higher international oil prices. India imports more than 70 percent of its oil, with the import bill soaring 40 percent for the year ended March to US$27.20 billion. The hike in oil prices could stoke inflation, which hit a 13-month low last month at 4.22 percent. PHOTO: AFP

World oil prices climbed yesterday amidst mounting concerns that two tropical storms could threaten US oil rigs in the Gulf of Mexico, dealers said.

New York's main contract, light sweet crude for delivery in August, rose US$0.29 to US$59.88 per barrel in electronic deals after earlier reaching US$59.99.

In London, the price of Brent North Sea crude oil for delivery in August gained US$0.14 to US$58.43 per barrel on Tuesday.

"Certainly the market has a bullish tone about it ... The market is very news-sensitive especially to [possible] supply disruptions ... the cyclone news from the US will keep the bullish sentiment intact," said Mark Pervan, a commodities analyst with Daiwa Securities in Melbourne, Australia.

The US National Hurricane Center issued advisories on Tuesday for tropical storm Cindy, located in the central Gulf of Mexico, and tropical storm Dennis, in the eastern Caribbean Sea.

Meanwhile, leaders of G8 nations object to high oil prices and want clear information on oil reserves to counter speculation in the markets because of the potential damage to growth, according to the draft text of a statement due to be issued this week from talks in Scotland.

In a text shown to reporters and dated June 28 but expected to change little before an official seal of approval, the G8 leaders acknowledge that the US needs to do more to balance the world economy by boosting US household savings and Europe and Japan need to spur their economic growth.

A diplomat showed reporters the text of the draft statement being negotiated as leaders meet for an annual summit at the Gleneagles hotel and golf resort in Scotland.

G8 leaders are expected to tackle their own immediate problems, one being oil's rise to a record of US$60.95 a barrel last week, seen as potentially derailing growth, especially the long-awaited recovery in Europe and Japan.

The draft text of the G8 communique says of oil markets: "Building on the productive discussions by our Finance Ministers, we reaffirmed the need for concrete actions to reduce market volatility through more transparent and timely data, and welcomed progress towards a global framework for reporting oil reserves, and look forward to further analysis of the workings of the oil market."

"On investment, we urge oil producing countries and companies and consumers to recognize their common interest in ensuring investment in sufficient future supplies of oil and refining capacity, and call for the removal of barriers to investment throughout the supply chain," the communique says.
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