Oil Prices Remain Above US$64 Amid Strong Demand

By Eddyson Lugangwa Posted 29 March 2006 @ 12:56 pm EET     Print     Reprint     E-Mail     Comments

Nairobi (IBTimes.com) - Crude oil futures held steady at above US$64 a barrel Tuesday amid strong demand sparked by the oncoming U.S. driving season and nagging worries about supply from Iran and Nigeria. Prices were firm

Light, sweet crude for May delivery was flat at US$64.16 a barrel on the New York Mercantile Exchange by
midday in Europe. May Brent crude on London's ICE Futures exchange fell 4 cents to US$63.57 a barrel.

Gasoline and heating oil were little changed at US$1.8250 and US$1.7828 a gallon (3.8 liters.) Natural gas rose just over 3 cents to US$7.098 per 1,000 cubic feet.

With the Northern Hemisphere's summer driving season approaching, gasoline at the pump in the United
States averaged US$2.50 a gallon, and government data showed that consumption was up 1.6 per cent over
the past four weeks compared with the same period a year ago.

The U.S. Energy Department predicted last week that gasoline prices may not run up much higher for the time being. PVM Oil Associates in Vienna said Wednesday's report on U.S. stocks was expected to show a gain of 1.6 million barrels in crude inventories - a 10 per cent cushion to the year ago level.

It based its forecast on "higher domestic production in the U.S.
Gulf Coast and healthy import rates, which are likely to outpace lower supply from Alaska and higher
refinery runs." Still, concern about supplies from Nigeria and Iran, and growing anxiety about the next hurricane season in the Gulf of Mexico, were expected to limit any price decline. Some analysts believe gasoline prices could climb as high as US$3 a gallon this summer, though that assumes some significant disruptions at refineries or difficulty in getting fuel to markets.

On Monday, militants in Nigeria's oil-rich southern delta released their last remaining foreign hostages - two Americans and one Briton - more than five weeks after the oil-industry workers were kidnapped. The militants took nine foreign oil workers hostage from a barge owned by Houston-based oil services company Willbros Group Inc., which was laying pipeline in the delta for Royal Dutch Shell PLC.

The group released six of the captives after 12 days in captivity.
The militants are behind a spate of attacks that have cut Nigeria's oil exports by more than 20 per cent. On Saturday, they said they killed three soldiers in clashes near a key natural gas plant run by Shell. Shell said there was no impact on the gas plant.

Iran, the No. 2 oil producer in OPEC, also remains a potential source of concern. It has been referred to the U.N. Security Council over fears it may want to misuse its nuclear program to make weapons, but the council has been at loggerheads over U.S.-led efforts to ratchet up the pressure on Tehran.