Oil climbed further above $75 on Tuesday as Israel prepared to advance deeper into Lebanon, ignoring calls for a ceasefire.
LONDON: Oil climbed further above $75 on Tuesday as Israel prepared to advance deeper into Lebanon, ignoring calls for a ceasefire, and saboteurs again attacked Iraq's northern oil export pipeline.
Violence in the Middle East, which pumps a third of the world's oil, is keeping prices within striking distance of July's $78.40 a barrel record high.
At 1320 GMT London Brent crude <LCOc1> was up 51 cents at $75.66 and US crude was up 40 cents at $74.80.
"Oil is a geopolitical barometer at the moment," said James Neale, an analyst with Citigroup Investment Research.
Oil markets are on edge that the war in Lebanon could suck in oil producers Iran and Syria, both allies of Hizbollah, and interrupt exports from the region.
Three weeks after the conflict erupted when Hizbollah guerrillas snatched two Israeli soldiers in a cross-border raid, a senior Israeli cabinet member said the army needed up to two more weeks to finish its offensive.
"I don't think there will be any quick and easy resolution. Even if the UN peacekeepers go into Lebanon, it will just mean that there's a third group stuck in the quagmire," said Tony Nunan, a manager with Japan's Mitsubishi Corp in Tokyo.
Fresh sabotage of a pipeline carrying crude from Iraq's northern oil fields to Turkey's Ceyhan port pushed back the planned restart of exports along this route.
Iraq has been struggling in vain to lift its exports to the 2 million per day level seen before the US-led invasion in March 2003. Sabotage is widespread and the northern oil pipeline has been at a standstill for months at a time.
A stand-off over Iran's nuclear programme also supported oil prices. The UN Security Council has demanded that the world's fourth biggest oil exporter suspend nuclear work by the end of August or face the threat of sanctions, setting a new deadline in a row that has helped lift oil 21 percent this year.
"The best-case scenario... would be that negotiations continue and become more protracted, while the worst-case would be that things turn nastier. Whatever it is, it doesn't seem that there will be a quick solution," Nunan said.
A more than 14 percent surge in U.S. natural gas prices on Monday following several nuclear plant outages and a nationwide heatwave also helped lift the energy complex, possibly shifting some power generation demand back to oil products.
September natural gas futures <NGc1> soared to their highest since April and gained another 0.47 percent to $8.25 per million British thermal units (mmBtu) on Tuesday.
Deutsche Bank analyst Michael Lewis said traders will be watching natural gas storage data due out on Thursday because of extreme heat in the United States.
"There has been industry demand for gas because it was cheap relative to the rest of the complex," he said.
US oil stocks date will be released at 1430 GMT on Wednesday. US crude stocks are forecast to fall by 1 million barrels last week, a Reuters poll found. Analysts see a gasoline stocks dwindling by 1.7 million barrels, with more than a month go to before the summer driving season ends.
Europe's biggest refinery, Shell's Pernis plant in Rotterdam, is still trying to bring back full gasoline production after a technical failure on July 14, a spokesman said. It also suffered a fire on July 29 after a naphtha leak.
"They're pushing the plants so hard, (refining problems) are not going to get any better," said SGCIB analyst Deborah White.
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
)
){kind=small}
){kind=small}
)
)
)
)
)
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}