LONDON, June 30, 2006 (AFP) – World oil prices continued to climb on Friday owing to jitters over motor fuel supplies before a long holiday weekend in the United States, dealers said.
New York’s main contract, light sweet crude for delivery in August, climbed 16 cents to 73.68 dollars per barrel in electronic deals before the official opening of the US market. The contract earlier hit 73.85 dollars — the highest point since May 11.
In London on Friday, Brent North Sea crude for August delivery rose 27 cents to 73.15 dollars per barrel in electronic trading after earlier touching 73.35.
"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.
About 35 million Americans are expected to take to their cars over the weekend, putting severe strain on the country’s gasoline or petrol stocks.
Meanwhile, New York’s oil market will remain closed on Monday and Tuesday for Independence Day July 4th celebrations.
US gasoline stocks are already being stretched 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.
Crude futures have climbed since Monday, supported by refinery disruption in the United States, strong US and Chinese demand and persistent concerns on the nuclear energy standoff with Iran, the fourth-largest global oil producer.
Oil prices extended gains following news from the US Department of Energy of steep falls in both motor fuel and crude stockpiles.
According to the DoE, demand for gasoline rose 1.2 percent in the week that ended June 23 to 9.54 million barrels per day, matching a record high set in August 2005.
Gasoline stocks in the US had fallen by one million barrels to 212.4 million last week, compared with market expectations for a rise of 450,000 barrels.
Meanwhile, the oil market has drawn some comfort from the prospect of a pause in US interest rate hikes, following the Federal Reserve’s decision on Thursday to hike borrowing costs by a quarter-point to 5.25 percent.
"The Fed comments… spread relief throughout the market for those that have been worried about inflation, higher interest rates and slower demand growth," Sucden analysts added.
Crude prices are now within two dollars of historic levels. New York crude had hit a record 75.35 dollars last April, while London Brent had struck 74.97 dollars in May, on the back of heightened concerns over Iran.