Oil prices surged more than 2 per cent to break a record yesterday after an unexpected drop in US gasoline stocks added to worries that a gathering Caribbean storm could damage US oil production platforms.
News that Iran's parliament had thrown out the new president's choice for oil minister added to the market's uncertainty and drew a big question mark over oil policy in Opec's second-biggest producer.
US crude closed at $67.35 (€82.64) a barrel, up $1.64, shortly after hitting $67.40. Oil hit its previous record, $67.10, earlier this month. London Brent was up $1.33 at $65.98.
US data released yesterday morning showed gasoline inventories in the world's biggest energy consumer tumbled 3.2 million barrels last week, or nearly 2 per cent, with two weeks of the peak US driving season to go.
"The gasoline draw is a bullish number, without doubt. The decline was much bigger than the 1.1 million barrels draw the Street was anticipating," said Jim Ritterbusch, analyst at Ritterbusch and Associates.
The market was also watching tropical storm Katrina take aim at Florida's southern tip and the oil producing Gulf of Mexico, which accounts for up to a quarter of US oil output. "The peak period for hurricanes is usually from August to September so the oil market is concerned about the risk of weather-related production losses over the coming weeks," said Kevin Norrish of Barclays Capital.
US crude stocks rose 1.8 million barrels last week, contrary to analyst forecasts for a fall. Heating oil supplies built as anticipated ahead of the winter.
Assurances by top exporter Saudi Arabia that it would pump as much oil as its customers need failed to take the sting out of a rally that has lifted oil toward the inflation-adjusted $82 a barrel of 1980, the year after the Iranian revolution. Traders were also watching Nigeria, the world's eighth-largest crude exporter, after the state-pricing agency instructed the national oil company to recover costs on sales, implying consumer prices are set to rise dramatically.
