Oil Prices Rise Toward $75 a Barrel
SINGAPORE – Oil prices edged toward $75 a barrel Wednesday amid concern that Iran, a key exporter, could cut supplies because of international pressure to modify its nuclear program. Washington planned to release weekly energy data on Wednesday, and analysts expected a decline in gasoline stocks.
Light, sweet crude for June delivery rose 26 cents to $74.87 a barrel in electronic trading on the New York Mercantile Exchange. The contract rose 91 cents to settle at $74.61 a barrel Tuesday. The intraday peak of $75.35 was reached briefly on April 21.
Analysts expect energy futures to remain high, as traders assess Iran’s nuclear program, rebels in Nigeria cutting off oil supplies, the possibility of terrorist attacks on oil facilities and tight U.S. gasoline supplies going into the summer driving season.
U.S. pump prices are rising, with U.S. drivers now paying about 14 percent more to fill their tanks than a year ago.
On Wednesday, the Department of Energy releases its weekly petroleum inventory report, and according to a Dow Jones Newswires survey, most market analysts predict it will say that gasoline stocks declined for the ninth straight week.
The estimates of the eight analysts in the survey averaged out to a decline of 800,000 barrels of gasoline. Expectations for crude and distillate stocks were mixed but leaned toward declines: a 100,000-barrel drop for crude, and a 400,000-barrel decrease for distillate stocks, which include heating oil and diesel fuel.
Gasoline futures on Wednesday rose 0.0089 cent to $2.1840 a gallon, while heating oil prices increased 0.0037 cent to $2.0825 a gallon.
On Tuesday, an Iranian official reiterated the country’s intention to keep enriching uranium, while U.S. Undersecretary of State Nicholas Burns said he believed European governments will agree to sanctions against Iran.
The United States, Britain and France plan to introduce a new Security Council resolution this week that would make Iran’s compliance with their demands mandatory, and enforceable through sanctions or military action.
As of yet, there has been no talk of economic sanctions that could slow Iran’s oil exports. China is a big customer for Iranian oil, and a cutoff of its oil exports would likely send oil prices surging.
Iran’s deputy oil minister, M. H. Nejad Hosseinian, said Tuesday crude oil prices are likely to hit $100 a barrel this winter as demand outpaces supply.
Crude oil prices are about 40 percent higher than a year ago. But accounting for inflation, prices are still about 20 percent below the records reached in 1981, when supplies became tight after a revolution in Iran and a war between Iraq and Iran.
In other Nymex prices, natural gas rose 2.4 cents to $6.770 per 1,000 cubic feet.