Crude oil rises in London after North Korea fires test missiles
Wednesday, July 5, 2006, 08:25
Oil rose in London after North Korea fired missiles into the Sea of Japan, raising concern about a possible conflict in Asia and instability in a region that is leading growth in global energy demand. North Korea's neighbors, Japan, China and South Korea are Asia's biggest oil importers. Brent oil for August settlement gained as much as 0.7% on the ICE Futures exchange in London, stemming two days of declines. It was 0.2% higher at $72.65 at 12:59 p.m. Singapore time. On the New York Mercantile Exchange, which was shut while Brent shed 1.4% on July 3 and July 4, oil fell as much as 0.7%. “The incident may have limited a decline in New York oil futures when trading resumed after the Independence Day holiday weekend,” said Rowan Menzies, a commodity market analyst at Commodity Warrants Australia Pty in Sydney. “There's a bit of a fear premium being put into the market, just in case anything untoward happens.” In New York, oil for August delivery fell 48 cents, or 0.7%, to $73.45 a barrel in after-hours electronic trading at 12:59 p.m. Singapore time. “I would have expected to see $1, $1.50, $2 off on Nymex but the North Koreans have put a bit more support into the market,” Menzies said. The drop in New York oil futures was limited by speculation gasoline demand over the U.S. holiday period will drain inventories. Last week, oil gained 4.3% before the four- day Fourth of July weekend, when a record 34.3 million Americans were expected to travel by car. “The strength of demand around the Independence Day holiday is probably the main issue that has held prices up towards the top of the trading band,” said Gerard Burg, a minerals and energy economist at National Australia Bank Ltd in Melbourne. “Concerns over the level of U.S. stocks and the strength of demand are holding oil up there.” Gasoline for August delivery gained as much as 1.12 cents, or 0.5%, to $2.23 a gallon in after-hours trading in New York. It was unchanged at $2.2188 at 12:59 p.m. Singapore time. North Korea's launch of the missiles drew protests from the U.S., Japan and other countries that had warned the communist country to refrain from doing so. The move was “unwise” and the communist nation should return to stalled negotiations about its nuclear arsenal, South Korea's Senior Presidential Secretary for National Security Seo Joo Seok said on YTN cable news channel. The United Nations Security Council will meet in New York later today to discuss the missile launches, YTN reported, without saying where it got the information. Oil has risen 20% this year in New York, partly on concern that mounting tensions over Iran's nuclear research program may lead to an interruption of oil supplies from the Islamic Republic. “There's also a tension there between Iraq worries, hurricane worries” and other factors that may reduce supply, he said. U.S. forecasts said the Atlantic Ocean's 2006 hurricane season may yield an above-average number of storms. Last year's season set a record with 15 hurricanes, the worst of which shut refineries and petroleum production along the U.S. Gulf Coast.