Oil prices climb back above $61

LONDON — Oil prices climbed back towards record highs yesterday as global financial markets shrugged off the impact of Thursday’s London bomb attacks.

By (Reuters)

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Published: Sat 9 Jul 2005, 10:58 AM

Last updated: Thu 2 Apr 2015, 4:38 PM

US crude for August delivery by 1345GMT rose 83 cents to $61.56 a barrel and London Brent rose 82 cents to $60.10 a barrel. US crude hit a record $62.10 in early London trade on Thursday.

Oil prices have advanced to successive new highs in recent weeks on the perception that global economic growth has not been significantly slowed by inflated energy costs.

Analysts said the attacks, said by Britain to bear the hallmarks of the Al Qaeda network, did not look likely to have the impact on the world economy seen after the September 11 attacks on the United States in 2001.

“The London bombings are unlikely to cause as deep a disruption in oil demand. They occur against the backdrop of a UK and global economy that remain strong,” said Antoine Halff, Director of Eurasia Group’s Global Energy practice.

Economists say that while oil prices have helped trim world gross domestic product growth from last year’s unusually strong 5.1 per cent increase, there is no sign yet of any significant slowdown.

A Reuters poll of 22 strategists at major banks, released yesterday, had a median forecast for world growth in 2005 of 4 per cent, slightly higher than a similar poll in January.

“It is slowing compared to last year, which was an exceptionally strong year, but ... it’s like a soft landing,” said Jose Alzola at Citigroup in London.

“We expect the US and China to continue to lead global growth, with the US being largely the engine of global demand growth,” said Maxine Koster at CSFB in London.

Strategists said if oil prices remain at around $60, they could shave 0.1 to 0.2 percentage points off their full-year global growth forecasts.

“If the oil price is $60 because demand pressures are stronger than you anticipated then it doesn’t have much impact at all on your bottom line,” said James Shugg at Westpac in London.

Most strategists saw little change in the global growth outlook between this year and next. The median forecast pointed to world GDP growth of 3.9 per cent in 2006.

The short-term focus for oil dealers is on potential supply disruptions to production and refining from Hurricane Dennis, the first of the Atlantic hurricane season.

Approaching the oil-rich US Gulf of Mexico, Dennis is expected to reach the southern US coast on Sunday.

Speculators are betting that refiners will be hard pressed to build up enough inventories of distillate fuels heating oil and diesel before the winter.

Oil and natural gas producers began evacuating workers on Thursday. Other companies said they did not return non-essential workers to offshore platforms and rigs after evacuating them earlier in the week for Tropical Storm Cindy, which came ashore on Wednesday.

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