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AFX Europe (Focus): Oil prices up on US gasoline stock draw-down, continued outages in Nigeria

Apr 06, 2006
LONDON AFX – Oil prices were higher as traders remained concerned about yesterday's much larger-than-forecast drawdown in US gasoline stocks and as Royal Dutch Shell said it has yet to resume production at its 115,000 bpd EA offshore field in Nigeria.
At 11.33 am, May-dated Brent contracts were up 59 cents at 67.69 usd, after closing up 71 cents to 67.10 usd yesterday. Meanwhile May-dated US light crude futures were up 53 cents at 67.62 usd.
Prices closed up yesterday after the US Energy Information Administration said gasoline stocks, in focus at present ahead of the peak demand summer driving season, lost another 4.4 mln barrels last week.
“Stocks have now fallen almost 10 mln barrels in the past 2 weeks, and with gasoline demand averaging almost 9.1 mln bpd … concern about availability continues to keep the market well supported,” said Sucden analyst Sam Tilley.
He added that while much of the falls are due to the Energy Department's new gasoline specifications leading refiners to clean out stocks blended with the water polluting additive MTBE, gasoline remains a concern.
“The headline figure of a fall in gasoline stocks, despite the continued build in crude stocks, supports the market and should keep it above 65 usd for the short term as concerns also remain about Nigeria and Iran,” said Tilley.
Iran today announced it had successfully test-fired a “top secret” missile as it presses ahead with its week of war games in the Gulf amid rising concern about its nuclear programme — seen as a front for a weapons drive by the West.
Meanwhile in Nigeria, oil giant Shell today cast doubt on government promises it will restart its 115,000 bpd EA oilfield this week, saying shut in production remains at 455,000 bpd and that this includes the EA oil field. Oil prices are now nearing their all time record of 70.85 usd as worries about supply risks in Iran and Nigeria, and concern about US gasoline stocks, more than offset the oversupply of crude in the market.
The EIA said yesterday crude stocks gained another 2.1 mln barrels last week, bringing them back to their highest levels in 7 years, while distillates lost a seasonal 2.6 mln barrels but maintained a healthy surplus.
Christopher Bellew, an oil broker at Bache Financial, said prices were also being supported by an influx of fund money into the commodities sector, which helped lift copper and zinc to new record highs yesterday. [email protected]

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