Oil prices jump above 77 dollars

16th June 2010, Comments 0 comments

World oil prices rose above 77 dollars a barrel on Thursday as the US government reported a drop in stockpiles of gasoline in the nation's peak demand season for motor fuel.

New York's main futures contract, light sweet crude for delivery in July, rose 40 cents to 77.34 dollars a barrel.

Brent North Sea crude for August delivery gained 57 cents to 77.57 dollars in late London trade.

The US Department of Energy (DoE) on Wednesday said that gasoline, or petrol, inventories fell by 600,000 barrels last week.

The DoE report is a key weekly event for traders because the United States is the world's biggest consumer of oil, followed by China. US demand for gasoline is meanwhile entering its peak summer holiday season during which many Americans drive long distances.

The DoE added on Wednesday that US crude stockpiles rose by 1.7 million barrels last week, a surprise for analysts who had forecast a drop of 1.3 million barrels.

Crude futures had already rallied on Tuesday, along with stock markets as investors grew more confident about the global economic recovery.

So far this week, oil prices have also benefited from a weaker dollar, which tends to boost demand for dollar-priced commodities as they become cheaper for buyers holding stronger currencies.

On Wednesday, BP agreed to pay 20 billion dollars into an independently run fund to meet the spiralling costs of the Gulf of Mexico oil disaster, bowing to tough demands from President Barack Obama.

The deal was revealed as top executives from the British energy giant met at the White House with Obama to discuss the crisis, which has triggered the nation's worst environmental disaster.

Both sides were armed with legal teams, after Obama vowed to make BP pay for its "recklessness," which triggered the massive spill.

A source with knowledge of the deal confirmed to AFP that BP had bowed to Obama's demands to set the money aside in the fund, adding it would be overseen by prominent lawyer Kenneth Feinberg.

BP is currently containing an average of 15,000 barrels a day of oil, which is being siphoned up to a processing ship on the surface via a mile-long pipe.


© 2010 AFP

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