Crude Moves Higher In Early Tuesday Trading
- Oil prices rose for a third day on Tuesday, climbing back above $64 after a fresh delay to BP's giant Thunder Horse oilfield in the Gulf of Mexico underscored the difficulty in meeting future demand growth.
U.S. light crude for October delivery rose 25 cents at $64.05 a barrel by 0340 GMT, extending a rebound from last Friday's intra-day six-month low of $62.03 a barrel. London Brent crude rose 33 cents to $64.38 a barrel.
Prices rallied 47 cents on Monday, the biggest rise in three weeks, after BP said that production from Thunder Horse, would be commissioned only in 2008. The oil major's previous target called for first oil sometime in mid-2007.
"The supply margin is so thin, every little blip is going to move the market. And the acute geopolitical risks have lessened but the chronic geopolitical risks are still there," said Tony Nunan, risk manager at Mitsubishi Corp. in Tokyo.
Thunder Horse, set to be the biggest field in the Gulf of Mexico with 250,000 barrels per day (bpd) of production, was initially scheduled to start producing in 2005 but hurricane damage and equipment problems have caused repeated delays.
The news helped shift traders' focus from hefty inventories and plentiful supplies during the weak autumn demand period to expectations that robust economic growth will continue to drive oil demand higher in the coming years, straining markets.
OPEC cut its forecast for demand for its oil in 2007 last week, saying average demand would be 800,000 bpd less than the 28.9 million bpd expected in 2006, partly due to the start-up of several major non-OPEC fields, including Thunder Horse.
Growth in non-OPEC supply has fallen short of forecasts in recent years.
HEALTHY STOCKS TO LIMIT UPSIDE
Oil prices have lost some $16 or close to 20 percent over the past two months, the steepest fall from a peak since 1991, amid rising oil inventories in the United States and easing risks related to Iran and the hurricane season.
U.S. light crude for October delivery rose 25 cents at $64.05 a barrel by 0340 GMT, extending a rebound from last Friday's intra-day six-month low of $62.03 a barrel. London Brent crude rose 33 cents to $64.38 a barrel.
Prices rallied 47 cents on Monday, the biggest rise in three weeks, after BP said that production from Thunder Horse, would be commissioned only in 2008. The oil major's previous target called for first oil sometime in mid-2007.
"The supply margin is so thin, every little blip is going to move the market. And the acute geopolitical risks have lessened but the chronic geopolitical risks are still there," said Tony Nunan, risk manager at Mitsubishi Corp. in Tokyo.
Thunder Horse, set to be the biggest field in the Gulf of Mexico with 250,000 barrels per day (bpd) of production, was initially scheduled to start producing in 2005 but hurricane damage and equipment problems have caused repeated delays.
The news helped shift traders' focus from hefty inventories and plentiful supplies during the weak autumn demand period to expectations that robust economic growth will continue to drive oil demand higher in the coming years, straining markets.
OPEC cut its forecast for demand for its oil in 2007 last week, saying average demand would be 800,000 bpd less than the 28.9 million bpd expected in 2006, partly due to the start-up of several major non-OPEC fields, including Thunder Horse.
Growth in non-OPEC supply has fallen short of forecasts in recent years.
HEALTHY STOCKS TO LIMIT UPSIDE
Oil prices have lost some $16 or close to 20 percent over the past two months, the steepest fall from a peak since 1991, amid rising oil inventories in the United States and easing risks related to Iran and the hurricane season.
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