Oil steady, weighs demand fears vs supply risks

SINGAPORE - Oil was steady under $145 on Tuesday, as dealers weighed the impact of high oil prices on global demand against fresh threats of supply disruptions in Nigeria, Brazil and Iran.

By (Reuters)

Published: Tue 15 Jul 2008, 2:16 PM

Last updated: Sun 5 Apr 2015, 12:49 PM

U.S. crude CLc1 was 14 cents lower at $145.04 a barrel by 0641 GMT, while London Brent crude LCOc1 was up 8 cents at $144 a barrel.

Traders remained concerned about possible supply disruptions from OPEC member Nigeria -- where militants in the oil producing region abandoned a cease-fire -- and from Iran, amid tensions with Israel and the West over Tehran's nuclear programme.

"The downside factors are temporary, but the concern over oil disruptions in Nigeria, and how will consumers cope if we lose Iran's production, is still making the upside push stronger," said Tetsu Emori, a fund manager at Astmax Co Ltd in Tokyo.

Oil prices have risen more than seven-fold since 2002 on growing demand from emerging nations like China and rising cash inflows into commodities from investors seeking to hedge against inflation and the weak dollar.

The dollar steadied near a record low against the euro on Tuesday, after rising on the U.S. announcement of an emergency plan to support two struggling top mortgage lenders, but worries about economic growth and the financial system capped its rise. [ID:nT135891]

"The financial crisis is not over, we are not optimistic, the dollar should get weaker and we should see more investor money turn to commodities and energy," Emori said.

Rising fuel costs have sparked global protests and cut U.S. fuel demand during the typical peak summer gasoline season, but robust growth in emerging economies continues to keep their appetite to consume high.

On Monday, U.S. President George W. Bush lifted a presidential ban on offshore drilling to boost domestic supplies and combat soaring energy prices. [ID:nN14378137]

Analysts said the plan would take a decade to bring real results and offer little short-term relief.

A congressional ban on offshore drilling also remains in place, and Senate Democratic Leader Harry Reid later on Monday rejected Bush's call to lift the moratorium.

Markets were also eyeing a low-pressure system about 1,300 miles east of the Lesser Antilles that could develop into a tropical depression. [ID:nN14411773]

A Reuters poll ahead of weekly U.S. government inventory data forecast that U.S. crude stocks fell 1.2 million barrels last week. U.S. gasoline inventories were seen down 300,000 barrels while distillate stocks were seen up 1.9 million barrels.

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