Oil prices rise on hurricane fears, US crude stocks decline
SINGAPORE, August 3 (AFP): Oil prices were higher in Asian trade Thursday, extending sharp overnight gains on concerns of an approaching storm could hit vital US installations and after a decline in US crude reserves, dealers said.
The decline is however seen as temporary, with the market worried the storm could gather strength and as the Middle East conflict shows no signs of being near to any resolution, they said.
The small reverse in afternoon was no more than quick profit- taking, they added.
New York's main contract, light sweet crude for delivery in September, was down 21 cents to 75.60 US dollars a barrel from its US close of 75.81 dollars Wednesday.
Brent North Sea crude for September delivery dropped 33 cents at 76.56 dollars.
Victor Shum, an analyst with energy consultancy Purvin and Gertz, said prices had rallied because of the on the tropical storm fears and the large crude oil stock decline reported in the United States.
The US National Hurricane Center said tropical storm Chris which is north of Puerto Rico on the western edge of the Atlantic could strengthen into the season's first hurricane.
As such, there are concerns it may move towards the US Gulf Coast and the oil and gas installations located there which last year were ravaged by hurricanes, pushing oil prices to then- record high points.
"If the storm changes or strengthen, there could be further upside risk to oil pricing," said Shum.
US crude oil inventories fell 1.8 million barrels to 333.7 million in the week to July 28, compared with forecasts of a drop of 875,000 barrels.
Gasoline (petrol) stocks dropped 100,000 barrels to 210.9 million, rather than by the much larger drop of 1.8 million expected.
Meanwhile, the Middle East conflict remains a worry until an agreement can be reached to stop the violence in southern Lebanon, dealers said.
Concerns that fighting in the area might spark a wider conflict caused oil prices to hit to all-time highs above 78 dollars last month.