The main focus in a volatile session for the oil markets on Thursday was the International Energy Agency’s monthly report that sent a number of conflicting messages, supplying evidence for the case of both the bulls and the bears.
After a bout of profit taking before the opening on the New York Mercantile Exchange, oil futures hit fresh record highs following the IEA report, edging up to $66 a barrel, before settling at a new highs from the previous record-setting close.
The bullish news was on the supply side as the IEA revised down its non-Organisation of Petroleum Exporting Countries crude supply for 2005 by 205,000 barrels per day to 50.8m bpd.
Of this, 150,000 bpd was due to unscheduled outages in North America and the North Sea. This put more pressure on Opec members to raise output that already runs close to capacity.
“In our view, a recovery in spare capacity is the minimum prerequisite for a return of some kind of normality to the oil market,” said Doug Leggate at Citigroup.
The IEA, however, cut its forecast for demand from China, the world’s second biggest oil consumer, and said it was revising downward its global demand growth forecast for 2005 by 200,000 bpd, or 1.9 per cent, to 1.58m bpd, compared with annual growth in 2004 of 3.6 per cent.
In New York trading, Nymex West Texas Intermediate for September delivery was up 90 cents to settle at $65.80 a barrel, a new closing high.
Brent crude for September rose $1.39 to $65.38 a barrel, which also marked a nominal record. Earlier in the session, Brent was as high as $65.66 a barrel.
Copper prices fell as inventories of the metal, monitored by the London Metal Exchange, rose at the fastest pace in nearly a year.
Stocks delivered to LME warehouses rose 5,800 tonnes, or 13 per cent, to 49,800 tonnes – the biggest daily increase since August 18 last year.
Although copper prices fell 0.3 per cent to $3,529 a tonne as a result, strategists warned that supply remained tight as inventories were still only running at one day of global demand.
“To what extent the current inflow of copper stocks will continue remains to be seen,” said Ingrid Sternby at Barclays Capital.
“When placed in a long-term perspective, LME copper stocks are significantly lower than the same time last year when they amounted to 81,750 tonnes.”
Gold rose to an eight-month high as investors turned to the metal as a hedge against inflation in the face of soaring oil prices, analysts said.
By midday in New York, bullion was up $5.40 at $442.40 a troy ounce.
