Stemergy: Renewable Fibre Technology

Oil Sets Yet More Highs Despite U.S. Inventory Rise

7 May 2008


LONDON (Reuters) - Oil set yet more record highs on Wednesday even after a large increase in U.S. crude inventories as concerns over global supplies continued to linger.

U.S. crude struck $122.81 a barrel, setting new peaks for three consecutive days and was trading 15 cents higher at $121.99 by 1545 GMT. London Brent crude set a record high of $121.47.

U.S. crude had fallen more than $1 in an initial response to figures from the U.S. Energy Information Administration (EIA) showing crude oil inventories rose 5.7 million barrels last week while analysts had forecast an increase of 1.6 million barrels.

Gasoline rose 800,000 barrels, compared with forecasts for a fall of 10,000 barrels.

Distillate inventories, including heating fuel and diesel, dropped by 100,000 barrels to 105.7 million barrels, against analysts' expectation of an 800,000 barrel increase.

The distillate inventories remain below year earlier levels in the United States and Europe.

"Traders were trying to comb the EIA data for any bullish feature and they found it in distillates," Jim Ritterbusch, president of Ritterbusch & Associates, said.

London's ICE gas oil futures led the oil complex higher, rising 0.81 percent, while New York RBOB gasoline fell 0.47 percent.

The advance in crude oil prices to fresh highs came after the head of the state run company of OPEC member Libya said oil prices would rise further.

"I think it will go higher," Shokri Ghanem, head of Libya's National Oil Corporation, told Reuters in a telephone interview. "It is the same old story -- speculation and geopolitics."

Traders remained concerned about supply disruptions in Nigeria, despite the end last week of a strike which halted Exxon Mobil output in the West African country.

"We all share the concerns over supply issues as Nigerian production improves, but is way off normal capacity and of course Iran's nuclear debate has resurfaced and will not go away," MF Global Energy said in a research note.

Concerns over supplies from the world's No. 4 oil producer resurfaced when Tehran said earlier this week it would refuse nuclear inspections.

Additional reporting by James Topham in Tokyo and Gene Ramos in New York; editing by James Jukwey

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