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The price of light crude oil for June delivery, in electronic trading on the New York Mercantile Exchange early afternoon Dublin time Tuesday, is $74.19 per barrel.
In London, Brent futures are at $74.26 per barrel.
In an analyst note this morning, Paul Harris, Head Energy & Emissions at Bank of Ireland Global Markets said:
Supply concerns and renewed investor interest pushed oil higher in early weekly trading - currently Brent stands at $74.30/bbl. The Iranian nuclear dispute continues to weigh prominently on traders minds - a Security Council resolution may precipitate action by Iran to limit or cease oil exports from the worlds 4th largest exporter. The spectre of possible US military action also looms large. As well as Iran, other geo-political factors serve to supplement supply concerns: the Nigerian disruption rumbles on and, over the weekend President Morales of Bolivia moved to nationalise oil & gas interests in the country. Morales is a staunch ally of the Venezuelan president Chavez & such action is likely to heighten concerns over security of supply in the US.
After last Wednesdays numbers, gasoline stocks are likely to show a draw of over 300,000 barrels with crude stocks & other distillates down 100,000 barrels when data is released tomorrow. These numbers underline the fact that demand seems immune to high prices, sentiments echoed by the Saudi Oil Minister who predicted high prices and strong demand for some time to come.
EU emergency oil stocks at comfortable levels and largely unaffected by last year’s releases
The European Commission said today that last Tuesday’s (25 April) meeting of the Member States Oil Supply Group confirmed the current levels of emergency oil stocks in Europe at 117 days of consumption, a figure well above the mandatory 90 days. The meeting reviewed the level of oil stocks in Member States and their replenishments following late 2005 releases in the context of the IEA concerted action after Hurricanes Katrina and Rita.
In view of the latest infringement procedures, the Commission reminded Member States of the importance of respecting the reporting deadlines and other obligations stemming from the European legislation on oil stocks. The Commission intends to continue enforcing the reporting discipline previewed in the applicable legislation in order to ensure a constant clear picture on the current stock levels.
The Commission also took advantage of the meeting for a further exchange of views with Member States on the demand-restraint measures envisaged by individual Member States for cases of emergency situations. Coordination of such measures at a European level could be useful in order to avoid potential incompatibilities or distortions.
European legislation[1] allows the Commission to set a target for reducing the consumption of petroleum products (by up to 10% of normal consumption). Participants also discussed the Commission’s recent Green Paper on a European Strategy for Sustainable, Competitive and Secure Energy and the expected follow-up, in particular the possible initiatives concerning oil. The Commission estimates that although the elevated oil prices of the past two years do not seem to have affected the economic prospects of the European or global economy so far, the current level of oil prices could impinge on economic growth in the coming months if they are sustained and if coupled with adverse monetary developments or speculative investments.
[1] Council Decision 77/706/EEC of 7 November 1977 on the setting of a Community target for a reduction in the consumption of primary sources of energy in the event of difficulties in the supply of crude oil and petroleum products.
