Oil firm above $70 on concerns over global supply
SINGAPORE, May 8 (Reuters) - Oil topped $70 on Monday as investors refocused on risks to supply as Iran rebuffed a U.N. call to stop work on nuclear fuel and Venezuela threatened to raise oil royalties and taxes.
Analysts also expect gasoline supplies in the United States to tighten ahead of the summer driving season which starts late this month, despite a surprise stock-build last week which helped drive down oil prices by more than 6 percent.
U.S. light crude for June delivery climbed 21 cents to $70.40 a barrel by 0441 GMT, inching up from a low of $69.94 reached last Thursday. London Brent crude rose 16 cents to $71.11 a barrel.
Prices are almost $5 below the record highs touched two weeks ago but up more than 15 percent since the start of the year.
"Support is very strong at $70 and buying sentiment is quite firm looking forward. Already, there has been active buying by the funds in the market and it looks prices are headed up this week," said Tetsu Emori, chief commodities strategist at Mitsui Bussan Futures.
"Geopolitically, there's not been any improvements in Iran and Nigeria and the situation in Venezuela is also adding to bullish sentiment," Emori said. "Despite the unexpected stockbuild, it will be the tightening gasoline situation in the U.S. that could eventually push oil prices to the $80 region."
Geopolitical concerns and the weak U.S. dollar -- which sank to an eight-month low against the yen -- also prompted fund speculators to pile into the metals markets, sending spot gold to a fresh 25-year peak and copper to record highs.
BULLISH OUTLOOK
International Energy Agency (IEA) director Claude Mandil said on Monday he expected oil prices to stay high for at least two to three years because of high global demand and tight supply.
"They (oil companies) have not invested enough for the last 20 years," Mandil said.
"This is a cyclical business. We had low prices in the 1990s, which was unfortunate for investment in future production. We now have accelerating investment, but that will not (see) results overnight," he told reporters in Australia.
Mandil's forecast came as analysts said energy costs could hit new highs if hurricanes batter U.S. production and refining centres again this summer.
Forecasts of another strong hurricane season came as companies are still struggling with the effects of last year's storms that pounded oil and natural gas infrastructure from the Caribbean to the U.S. Gulf Coast and propelled U.S. traded gasoline prices above $3 a gallon.
Iran kept up its defiance over its nuclear aims with President Mahmoud Ahmadinejad renewing a threat to quit the nuclear Non-Proliferation Treaty (NPT), even as President George W. Bush said Tehran posed a threat to Israel and other countries.
Ahmadinejad added that Iran would reject any resolution by the United Nations to stop the country from carrying on with its uranium enrichment activities.
Adding to the growing natural resource nationalism in the Andean region, Venezuela -- the world's fifth-largest oil exporter -- said it was seeking to boost royalties and income tax on four heavy oil projects that process some 620,000 barrels per day (bpd) in the Orinoco Belt.
The announcement came less than a week after Bolivia rattled markets by sending troops into oil and gas fields in a surprise nationalisation of the country's energy sector.
In Nigeria, a quarter of oil production remained shut in due to militant violence, although a major oil union on Thursday suspended a planned shutdown of the local unit of Exxon Mobil Corp. after agreeing to a deal.
Oil prices remained strong despite high production from the Organization of the Petroleum Exporting Countries (OPEC), which averaged 29.76 million bpd in April, the highest this year and up from 29.62 million bpd in March.
SINGAPORE, May 8 (Reuters) - Oil topped $70 on Monday as investors refocused on risks to supply as Iran rebuffed a U.N. call to stop work on nuclear fuel and Venezuela threatened to raise oil royalties and taxes.
Analysts also expect gasoline supplies in the United States to tighten ahead of the summer driving season which starts late this month, despite a surprise stock-build last week which helped drive down oil prices by more than 6 percent.
U.S. light crude for June delivery climbed 21 cents to $70.40 a barrel by 0441 GMT, inching up from a low of $69.94 reached last Thursday. London Brent
Prices are almost $5 below the record highs touched two weeks ago but up more than 15 percent since the start of the year.
"Support is very strong at $70 and buying sentiment is quite firm looking forward. Already, there has been active buying by the funds in the market and it looks prices are headed up this week," said Tetsu Emori, chief commodities strategist at Mitsui Bussan Futures.
"Geopolitically, there's not been any improvements in Iran and Nigeria and the situation in Venezuela is also adding to bullish sentiment," Emori said. "Despite the unexpected stockbuild, it will be the tightening gasoline situation in the U.S. that could eventually push oil prices to the $80 region."
Geopolitical concerns and the weak U.S. dollar -- which sank to an eight-month low against the yen -- also prompted fund speculators to pile into the metals markets, sending spot gold
BULLISH OUTLOOK
International Energy Agency (IEA) director Claude Mandil said on Monday he expected oil prices to stay high for at least two to three years because of high global demand and tight supply.
"They (oil companies) have not invested enough for the last 20 years," Mandil said.
"This is a cyclical business. We had low prices in the 1990s, which was unfortunate for investment in future production. We now have accelerating investment, but that will not (see) results overnight," he told reporters in Australia.
Mandil's forecast came as analysts said energy costs could hit new highs if hurricanes batter U.S. production and refining centres again this summer.
Forecasts of another strong hurricane season came as companies are still struggling with the effects of last year's storms that pounded oil and natural gas infrastructure from the Caribbean to the U.S. Gulf Coast and propelled U.S. traded gasoline prices above $3 a gallon.
Iran kept up its defiance over its nuclear aims with President Mahmoud Ahmadinejad renewing a threat to quit the nuclear Non-Proliferation Treaty (NPT), even as President George W. Bush said Tehran posed a threat to Israel and other countries.
Ahmadinejad added that Iran would reject any resolution by the United Nations to stop the country from carrying on with its uranium enrichment activities.
Adding to the growing natural resource nationalism in the Andean region, Venezuela -- the world's fifth-largest oil exporter -- said it was seeking to boost royalties and income tax on four heavy oil projects that process some 620,000 barrels per day (bpd) in the Orinoco Belt.
The announcement came less than a week after Bolivia rattled markets by sending troops into oil and gas fields in a surprise nationalisation of the country's energy sector.
In Nigeria, a quarter of oil production remained shut in due to militant violence, although a major oil union on Thursday suspended a planned shutdown of the local unit of Exxon Mobil Corp.
Oil prices remained strong despite high production from the Organization of the Petroleum Exporting Countries (OPEC), which averaged 29.76 million bpd in April, the highest this year and up from 29.62 million bpd in March.
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