Brent crude rises $1/bbl on storm worries

22 July 2008 10:43  [Source: ICIS news]

SINGAPORE (ICIS news)--Crude futures gained more than $1/bbl on Tuesday amid renewed concerns over a storm in the Gulf of Mexico and further weakness in the US dollar.

At 08:38 GMT on Tuesday, September ICE Brent futures were trading at $133.52/bbl, up 91 cents/bbl on Monday’s settlement price, having earlier hit a high of $133.75/bbl, up $1.14/bbl

At the same time, August NYMEX light sweet crude futures traded at $131.95/bbl, up 91 cents/bbl on Monday’s settlement level. Earlier it hit a high of $132.07/bbl, up $1.03/bbl.

The August NYMEX contract expires at the close of business on Tuesday.

Concerns over Tropical Storm Dolly re-emerged as a market driver amid forecasts that it would make landfall in Mexico and could affect refinery operations in the southwest US area.

However, the storm, which is expected to grow into the first hurricane of the 2008 season, is thought unlikely to disrupt operations at major oil and gas facilities in the Gulf, which are located further to the north.

Further weakness in US dollar which was trading a levels below €0.63 for the first time in over a week served to attract funds into the oil market.

Geopolitical tensions between the west and Iran remained a concern following the failure of weekend talks to resolve the dispute over Tehran’s nuclear ambitions.

Analysts have forecast that weekly US inventory data due out on Wednesday will reveal a decline in crude stocks of around 500,000 bbls, and a fall in gasoline stocks of around 100,000 bbls.

However, distillates inventories were expected to rise by over 2m bbls. Last week, unexpected large builds in US crude and product inventories contributed to the slump in crude prices.

($1 = €0.63)

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By: James Dennis
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