Brent crude oil hits another 11 month high of 77.45 usd

Brent crude oil hits another 11 month high of 77.45 usd

	Published : Fri, 13 Jul 2007 12:59 By : Agencies Print this Story

LONDON (Thomson Financial) - Brent crude oil hit a fresh 11 month high of 77.45 usd, pushed higher by rising equity markets and a weak US dollar, with ongoing concerns over tightening supply still in the background.

'The large moves in the equity markets have given some strong support to crude oil,' said CMC Markets trader, Nas Nijjar. 'The dollar's fall has also been bullish for crude.'

At 12.36 pm, London's benchmark Brent crude contracts for August delivery were up 87 cents at 77.27 usd per barrel. Prices touched an intra-day 11-month high of 77.45 usd.

Meanwhile, New York crude contracts for August delivery were up 29 cents at 72.79 usd per barrel.

Brent prices, which have gained around 8 pct in the last two weeks, are now within sight of the all-time high of 78.65 usd struck last August.

Concerns over tight global crude supply have propelled the market recently, attracting fund speculators attracted to oil's gains, pushing prices even higher.

The International Energy Agency (IEA) repeated its calls for OPEC to increase production to help lower prices, today.

'We have been saying for months that we think that OPEC should increase its production in the second half (of the year). The message is the same,' David Fyfe, one of the IEA's main analysts said.

OPEC have thus far refused to increase output, blaming high oil prices on refinery issues in the US, and speculation in the financial markets.

Oil prices have been supported in recent months by concerns over US gasoline supply, which has been hampered going into the peak demand summer driving season by a series of refinery outages.

Now, with refineries starting to come back onstream, gasoline prices are expected to fall, possibly dragging crude with them, according to some analysts.

'The speculative assault on crude remains very impressive, but to be sustained will need to have the support of the products,' said Petromatrix analyst Olivier Jakob.

However, some analysts believe that crude demand is clearly still high, as Brent has now moved into backwardation, whereby the price for front month delivery is more expensive than future contracts.

'Markets move to backwardation when demand is strong,' said Dennis Gartman, the editor of The Gartman Letter trading note. 'The market is no longer willing to pay for a commodity to be stored and instead is marking prices higher to draw upon available reserves.'

Brent's recent price gains have been supported by the closure of a number of North Sea oilfields for maintenance as well as a pipeline issue in the area.

'The North Sea pipeline problem, together with the maintenance, will impact near-term Brent output,' said Victor Shum, an analyst with energy consultancy Purvin and Gertz in Singapore.

Prices have been further supported by geopolitical concerns, with militant attacks and kidnappings in key producer Nigeria, and tension between the West and Iran over the Islamic state's disputed nuclear programme, posing a threat to supplies.

d.sheppard@thomson.com

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