World oil prices extend rebound in Asian trade

New York's main oil futures contract, light sweet crude for September delivery, advanced 53 cents to 116.53 dollars a barrel. It had rallied 2.99 dollars at the close of New York floor trading Wednesday.

Brent North Sea crude for September was up 73 cents at 114.20, after gaining 2.32 dollars in London trade the previous day.

‘Crude has regained some of its losses over the past few trading sessions reacting to the inventory report which showed very substantial stock draws in gasoline,’ said energy analyst Victor Shum at Purvin and Gertz in Singapore.

The US Department of Energy reported Wednesday that US reserves of petrol had fallen by 6.4 million barrels in the week ended August 8. That was worse than analysts' predictions for a drop of just 2.0 million barrels.

Petrol inventories are closely watched at this time of year as American motorists hit the highways for their summer vacations, typically pushing up demand for the refined fuel.

Despite the rally, Shum said that slowing global energy demand resulting from the weakening economies of the United States, Europe and Asia was likely to weigh down on oil prices.

The market at the moment appeared to be ignoring supply-side issues that could arise from geopolitical risks, he said.

‘Concerns about the US economy and now the spread of the economic slowdown to Europe and Asia could push crude oil pricing to test lower lows because some of the supply issues have been discounted by the market,’ Shum said.

Dealers have said that fears of supply disruption had receded after Russia and Georgia agreed to a French-brokered peace plan following several days of hostilities.

Georgian forces were retaking control of the Georgian city of Gori as the Russian military withdrew, Interior Ministry Spokesman Shota Utiashvili told AFP Thursday.

British energy giant BP said on Tuesday that it had closed a regional oil pipeline because of the fighting, but that supplies were flowing from the Caspian Sea to the West by other routes.

Energy expert Shum said threats of future supply disruption were limiting the oil price decline.

‘The supply issues should really become relevant again at some point and this is likely to backstop the drop in oil pricing,’ he said. ‘These issues have not disappeared, they have simply been discounted.’

Oil prices have tumbled dramatically since hitting record highs above 147 dollars one month ago.