NEW YORK, July 24, 2006 (AFP) – Oil prices rose Monday, recovering from earlier losses on fears for US gasoline supplies due to refinery outages.
Prices had been down for much of the day as prospects rose for a ceasefire between Israel and Hezbollah militants in Lebanon, dealers said.
New York’s main contract, light sweet crude for delivery in September, added 62 cents to close at 75.05 dollars a barrel.
In London, Brent North Sea crude for September delivery stood at 74.61 dollars a barrel, up 86 cents from Friday’s settlement.
"Prices were lower this morning because the Middle East fighting didn’t expand," Alaron Trading analyst Phil Flynn said.
"But the market seems to be riding on a combination of hot temperatures in the (US) Midwest and refinery issues," he said.
Cooling towers at a ConocoPhillips refinery at Wood River, Illinois, have been temporarily shut down after suffering damage in severe storms.
And the giant Amway refinery in Venezuela, which exports fuel to the United States, is set to be shut down for up to seven months after a fire last week, trade sources said.
"It’s very hot across the Midwest and other parts of the US, which has been driving natural gas prices higher," Flynn said.
"There’s also been some talk about the Gulf of Mexico getting a little stormy and some are watching it very closely to see if it turns into a tropical storm down the road," he added.
Concerns that the Middle East violence could spread to major crude-producing nations saw oil prices soar to all-time highs above 78 dollars earlier this month.
But on a surprise visit to Beirut Monday, US Secretary of State Condoleezza Rice called for an urgent ceasefire in the Lebanon conflict even as Israeli troops were locked in combat with Hezbollah.
"We believe that a ceasefire is urgent," Rice told reporters en route to the region, where she was also due to hold talks with Israeli Prime Minister Ehud Olmert and Palestinian leader Mahmud Abbas.
Israeli leaders, while warning the offensive could last for some time, have suggested they would accept some form of international peacekeeping force in southern Lebanon.
"An international peacekeeping force should be seen as a step in the right direction, and if it were to happen, it would probably pull prices down again," Investec energy analyst Bruce Evers.
"The Americans are refusing to condemn the Israeli actions, but there is a growing chorus of criticism from the international community, and the market is hoping that these criticisms will actually lead to a ceasefire."
However, he warned that "the big concern is that Syria and Iran get pulled into the whole thing".
Washington has come under pressure for bold action amid criticism it is stalling to allow Israel time to attempt to wipe out Hezbollah, which set off the conflict after seizing two Israeli soldiers on July 12.
Oil prices could climb higher in the third quarter of 2006, the Centre for Global Energy Studies said in a monthly report published on Monday.
"The CGES expects oil prices to remain firm or even strengthen this quarter," the influential research body said.
Since striking the highs, crude futures have fallen in London and New York by around six percent. However, current crude prices remain some 20 percent higher than at the start of 2006.
The outlook for oil futures "depends on the situation in the Middle East and the hurricane season", according to Evers.
Last year energy facilities off the rig-heavy US Gulf Coast were ravaged by hurricanes, pushing oil prices to then-record highs.