Oil prices rebound on Middle East tensions
Global demand for oil is rising
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Thursday, 18, Oct 2007 11:59
Oil prices have climbed again after temporarily dropping back due to a higher-than-expected rise in US crude stocks.
A vote by Turkey's parliament to endorse possible military action against Kurdish rebels in Iraq saw oil prices resume the trend of recent rises, amid fears that supplies from the region could be disrupted by any action.
"The Turkish parliament approved military action in northern Iraq by a large majority and this spectre of geopolitical risk casts a big enough shadow over the market to ensure that the downside is limited," explained Paul Harris, head of natural resources risk management at Bank of Ireland Global Markets.
In early trading US light, sweet crude subsequently gained 28 cents, rising to $87.68 (£43), while Brent added 21 cents to $83.34.
The rise came despite the Turkish government having said that it does not plan imminent action in northern Iraq, where they are keen to tackle Kurdish insurgents who are campaigning for the establishment of an independent homeland incorporating territory in the region and parts of eastern Turkey.
Yesterday oil prices touched the $89 (£43.50) a barrel mark amid growing fears about instability in the Middle East, but later closed down after the US Energy Information Administration (EIA) reported that the nation's crude inventories rose by 1.8 million barrels in the week to October 12th.
In addition to the higher-than-expected rise in crude stocks, remarks by Nigeria's oil minister also helped stem oil prices yesterday.
Odein Ajumogobia told the Reuters news agency that the leaders of the Organisation for Petroleum Exporting Countries (Opec) could opt to boost output during talks between heads of state in Saudi Arabia on November 17th - three weeks ahead of the organisation's next official meeting.
Opec has already pledged to boost its production by 500,000 barrels per day from the start of next month, in order to cope with the growing global demand for oil.