Oil prices held firmly above $60 a barrel today as speculators sought to test the resilience of strong US demand and as Iran's presidential election sowed fresh geopolitical worries.
US crude futures traded down 19 cents to $60.35 a barrel after rising 70 cents yesterday to close above $60 for the first time since trading started in 1983. London Brent crude slid 24 cents to $59.06 a barrel.
Speculative buying has helped fuel a 29 per cent gain in prices since May 20th amid growing fears of a global strain on production and refining capacity in the fourth quarter, when demand for heating oil peaks.
Oil demand in the United States and Asia has so far remained strong in the face of soaring fuel costs, encouraging traders to test the upper limits of what consumers will pay for.
Higher costs may be creating obstacles for economic growth in many import-dependent countries but they have yet to derail a global expansion, economic officials say.
South Korea's central bank chief said today that high energy costs could shave 0.7 percentage point from the country's economic growth this year if a trend of rising oil prices is sustained.
NYMEX gasoline for July gained 27 points to $1.6777 a gallon, just off the $1.69 high struck in April. July heating oil dipped 26 points to $1.6735 a gallon.
US data due tomorrow will provide the next gauge of stocks and demand in the world's biggest consumer. Analysts expect a fourth consecutive decline in crude inventories and a rise in distillates as refiners maximize operations.
Crude stocks likely fell by 1.5 million barrels last week, while distillates should post a seasonal rise of 1.6 million barrels, a Reuters preliminary survey found.
Demand for distillates, which include heating oil and diesel, typically peaks during the northern hemisphere winter. It has been running strong this year, limiting refiners' ability to lift stockpiles from below-average levels.