AP
Oil Prices Rebound Above $64 a Barrel
Thursday March 29, 8:35 am ET
By George Jahn, Associated Press Writer
Oil Prices Rebound Above $64 a Barrel in Tensions Over Iran Detaining British
Marines, Sailors
VIENNA, Austria (AP) -- Oil prices rebounded above $64 a barrel Thursday,
reflecting an upward blip in tensions over Iran's detention of 15 British navy
personnel, after London said it would take the issue to the U.N. Security
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Iran, the world's fourth-largest oil producer, is located along the Strait of
Hormuz, through which about two-fifths of the world's oil is transported.
Traders worry that oil supplies could be disrupted if unrest escalates there.
After opening lower, light, sweet crude for May delivery rose 6 cents to $64.14
a barrel in electronic trading on the New York Mercantile Exchange by afternoon
in Europe. The contract settled at $64.08 a barrel Wednesday, its highest close
since September.
May Brent crude on London's ICE Futures exchange rose 36 cents to $66.14 a
barrel.
Oil spiked briefly above $68 a barrel in after-hours trading late Tuesday on a
rumor -- denied by the U.S. military -- that Iran had fired on a U.S. ship in
the Persian Gulf.
"The hypersensitivity to the geopolitical situation is setting the market up
for vastly increased volatility ahead," said Fimat USA analyst John Kilduff.
Iranian authorities have detained the British marines and sailors since last
Friday on claims they had trespassed into Iranian territory. Britain maintains
they were in Iraqi waters.
On Wednesday, Iran's foreign minister said Britain must admit the 15 entered
Iranian waters to resolve a standoff over their capture. Then, on Thursday,
Britain said it was taking the issue to the Security Council -- prompting
Tehran to warn it was reconsidering releasing the only woman among the
detainees.
Also providing support to prices was the weekly petroleum supplies report from
the United States. The Energy Department reported Wednesday that crude oil
inventories slipped by 900,000 barrels last week to 328.4 million barrels.
Stocks of gasoline and distillate fuel, which include heating oil and diesel
fuel, also fell.
It was gasoline's seventh straight week of decline, a worrisome signal ahead of
the summer driving season.
But traders remained focused on developments in Iran.
"The spike showed people what could happen if tensions do increase," said Eric
Wittenauer, an energy analyst at A.G. Edwards in St. Louis.
Vienna's PVM Oil Associates noted remarks by OPEC Secretary General Abdullah
al-Badri linking current prices to geopolitical developments and not market
fundamentals, suggesting a bullish market.
Such remarks indicate that "it is unlikely the exporter group will move to
increase supplies in the near future," said PVM.
In other key contracts, heating oil was essentially stable at 1.8321 per gallon
(3.8 liters) and natural gas prices fell 3.9 cents to 7.633 per 1,000 cubic
feet.
Associated Press writer En-Lai Yeoh contributed to this report from Singapore.
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