Crude oil futures were volatile on Wednesday after reports showing global oil demand stronger than expected and US crude inventories falling, while Saudi Arabia tried to reassure oil markets that it was ready to meet any request for higher demand.
Prices were also affected by the closure of some oil and gas-producing fields in the Gulf of Mexico as tropical storms swept through the region.
IPE Brent crude futures for September delivery gained 29 cents to $41.57 a barrel in late London trade, having moved in a $1 range either side of the previous closing price. Prices were lower than the record of $41.69 set on Tuesday.
September Nymex WTI gained 28 cents to settle at $44.80 a barrel in New York, with prices trading in a $1.50 range but unable to continue the eight-day run of successive new peaks. On Tuesday the US benchmark crude price broke the psychological $45 point for the first time.
US commercial crude oil inventories dropped 4.3m barrels from the previous week, a larger than expected fall which put crude inventories at the bottom half of the average range for this time of year, according to weekly statistics from the Energy Information Administration, part of the US energy department.
The fall in crude inventories came despite an increase in oil imports to 9.5m b/d for the latest week, and a drop in refinery capacity rates.
The EIA said motor gasoline inventories fell 1.8m barrels last week, but were near the upper end of the average range.
Ali al-Naimi, the Saudi Arabian oil minister, tried to hose down the record oil prices. “The Kingdom of Saudi Arabia, in collaboration with the other Opec countries, endeavours to ensure the stability of the international oil market and prevent oil prices from escalating in a way that may negatively affect the world economy or oil demand,” Mr al-Naimi said in a rare public statement.
He said Saudi Arabia was well prepared to meet all the requirements of the international oil companies if they needed additional volume, relying on its surplus production capacity of more than 1.3m barrels daily, which could be used immediately,
The International Energy Agency, the watchdog of the OECD, said yesterday that global oil demand was higher than previously expected. However, it estimated that Opec would increase capacity by 370,000 b/d by the end of this year and another 680,000 b/d by the end of 2005.
Gold prices fell following a rise in the US dollar after the Federal Reserve raised interest rates. Bullion was trading at $393.95/$394.45 a troy ounce compared with the late quote of $399.90/$400.40 a troy ounce.
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