Gasoline demand advanced 4.6 percent last week from 2005, the U.S. Energy Department reported yesterday. Crude oil fell below $60 for the first time since March 21 yesterday after U.S. President George W. Bush supported diplomatic efforts to end a dispute with Iran, the world's fourth-largest oil supplier, and as fuel inventories gained.
``When you look at the overall picture, we don't see any change in demand,'' said Gavin Wendt, senior resources analyst at Fat Prophets Funds Management in Sydney. ``People are still driving their cars.''
Brent crude for November delivery rose as much as 50 cents, or 0.8 percent, to $60.97 a barrel. The contract traded at $60.85 at 1:22 p.m. in London on the ICE Futures exchange.
New York-traded crude has declined 22 percent from a record $78.40 a barrel reached on July 14. Prices fell as fuel stockpiles in the U.S. rose and as tensions in the Middle East eased.
``There was some heavy selling yesterday before the DOE statistics, and again they show a very solid build on important products,'' Tom Hammervold, an oil trader at Norsk Hydro ASA, said by phone from Oslo.
``The geopolitical environment has calmed down and the key risks have been reduced,'' Hammervold said. ``There have been really bearish undertones. You haven't had any support from bullish news for over a month now.''
Below $60
The October contract for New York crude, which expired yesterday, declined to $59.80, the lowest intraday price for the front-month contract since March 21. It closed 2 percent lower at $60.46 a barrel.
The November contract was at $61.15 a barrel in after-hours electronic trading on the New York Mercantile Exchange at 1:23 p.m. in London.
``Most of the weakness yesterday'' was caused by strong U.S. inventories, Tony Machacek, a Bache Financial Ltd. broker, said by phone from London. ``The distillate build was the most negative element.''
Gasoline inventories rose 560,000 barrels to 207.6 million, the Energy Department report showed. Crude-oil supplies dropped 2.84 million barrels to 324.9 million.
Analysts expected greater gains in gasoline and a smaller drop in crude supplies, according to a Bloomberg News survey of 16 people. Still, inventories are above averages. Crude oil supplies are 5.5 percent higher than a year earlier.
OPEC Basket Price
The basket price from the Organization of Petroleum Exporting Countries, a weighted average of several types of crude that is updated daily, fell to $56.54 a barrel on Sept. 20, down from the August average of $68.81.
OPEC left its production quota unchanged at this month's meeting in Vienna. The group has said it may cut output if prices fall below $60 for a sustained period of time.
``If it falls much below $60, I would imagine they will cut back on production,'' Hammervold said.
``There's still the possibility over the next 12 months or so, if there is any sort of supply disruption or further tension in the Gulf, you'll see oil prices over $100 a barrel,'' Greg Smith, managing director of Global Commodities Ltd., said in an interview in Singapore.
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