Thursday, September 2, 2010

Oil prices rose slightly, finding support above 60 dollars per barrel after heavy overnight falls in reaction to a bigger-than-expected increase in US gasoline reserves, analysts said.

However, the market remains about 25 percent underneath the target level agreed by G8 leaders this week as a "fair" price to pay.

London's Brent North Sea oil for delivery in August gained 94 cents to 61.37 dollars per barrel in morning trade.

New York's main contract, light sweet crude for August delivery, added 82 cents to 60.96 dollars a barrel.

On Wednesday, both oil contracts had struck the lowest levels since late May, with Brent hitting 60.30 and New York crude touching 60.01.

Data released by the US Department of Energy (DoE) showed Wednesday that the country's gasoline reserves increased by 1.9 million barrels in the week ending July 3, more than double market expectations.

Gasoline reserves would have typically fallen at this time of the year when Americans traditionally take to the roads for their summer holidays, but analysts said the recession has taken a toll on consumer spending.

"Oil futures took another deep dive yesterday, after the weekly (US) inventory data," said analysts at consultancy JBC Energy in Vienna.

"It appears that -- at least for the short term -- the sentiment in oil markets has turned bearish and weak fundamentals (of supply and demand) are in the spotlight."

The Organisation of the Petroleum Exporting Countries (OPEC) said Wednesday it had lowered its medium and long-term forecast for global demand due to the worldwide recession.

In its World Oil Outlook 2009, OPEC said that under its revised main forecast oil demand would be "less than 106 million barrels per day (bpd) in 2030, down from 113 million bpd."

Meanwhile in Italy, G8 leaders agreed Wednesday that 70-80 dollars was a fair price to pay for a barrel of oil, a spokeswoman for Russian President Dmitry Medvedev told reporters.

"The G8 leaders... agreed that this price is fair," the spokeswoman Natalya Timakova said.

Ahead of the G8 summit, British Prime Minister Gordon Brown and French President Nicolas Sarkozy had said they wanted the three-day gathering taking place in Italy to stabilise oil prices after a 12-month period which has seen the price for a barrel of crude fluctuate between 32 and 147 dollars.