Oil holds despite expected stock build

by MBALAR@SBCGLOBAL.NET on 2006-06-21 06:57:24

Oil holds despite expected stock build
Crude prices have come under pressure from the prospect of U.S.
interest rate hikes, moves in China to curb growth.
June 21, 2006: 8:45 AM EDT

SINGAPORE (Reuters) - Oil prices held over $69 Wednesday as traders
balanced ongoing geopolitical supply worries with the prospect of
rising interest rates and larger fuel inventories in the United States.



U.S. light crude for August gained 5 cents to $69.39 a barrel, after
the July contract expired down 4 cents at $68.94 on Tuesday. London
August Brent crude gained 4 cents to $68.12.


Oil prices have come under pressure from the prospect of U.S. interest
rate hikes and moves in China to curb growth, which could dampen demand

from the world's two largest oil consumers.


"Traders seem hesitant to push crude prices higher but there are few
signs that a substantial downturn is imminent," said Geoff Pyne at ABN
AMRO. "The apparent invincibility of the global economy to high prices
is being called into question."


Fears of faltering demand could be backed up by weekly U.S. government
data due later Wednesday, with analysts polled by Reuters expecting a
1.2 million barrel build in gasoline stocks last week, a rise for the
eighth consecutive week.


Higher fuel prices will cut back some consumption, but world oil demand

should still soar 37 percent by 2030, driven by transportation and
non-industrialized countries in Asia, the U.S. government's energy
forecasting agency predicted Tuesday.


Crude imports into South Korea, the world's fourth-largest crude buyer,

climbed 13 percent in May as oil product demand grew more than 4
percent from a year ago, official data showed Wednesday.


Eyes on Iran
Prices have slipped from a record $75.35 in April but have resisted a
sharper fall in other commodities such as metals, which saw bearish
economic data wipe as much as 25 percent off prices that had soared to
all-time or multi-year highs.


Support for oil prices has come from continuing tensions over Iran's
nuclear ambitions, together with persisting unrest in Nigeria and Iraq.



President George W. Bush arrived in Europe on Tuesday to try to secure
European support for sanctions if Iran refuses to suspend uranium
enrichment.


A U.S.-backed package of incentives was offered to Iran early this
month, and Iran, the fourth-biggest oil exporter, has been given an
unofficial mid-July deadline to reply to the offer.


World oil prices could triple if the diplomatic standoff over Iran's
nuclear program escalates into a military conflict, Saudi Arabia's
ambassador to the United States warned Tuesday.


However, the United States would be in "good shape" with enough
emergency oil supplies if the dispute caused Tehran to cut its oil
exports, U.S. Energy Secretary Sam Bodman said Tuesday.


In Nigeria, armed men in a speedboat kidnapped two Filipino oil workers

from its oil capital Port Harcourt on Tuesday, the latest in a string
of kidnappings and attacks that have shut in some 500,000 barrels a day

of oil since February.


Qatar Oil Minister Abdullah al-Attiyah said that unless the global oil
picture changes markedly, OPEC would not alter production quotas when
it meets in September, after the cartel kept output near full tilt at
the start of June.


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