Crude oil prices dip but fears halt deeper sell-off

OIL prices fell below $73 a barrel yesterday in thin trade, but nagging fears about supply disruption and expectations of strong US demand for petrol prevented a deeper sell-off.

London Brent crude was 80 cents lower at $72.59 a barrel by 1715 GMT after breaking through the $73-a-barrel psychological level.

Trading activity has been limited so far this week because of the closure of markets in the US to mark their Independence Day.

Ahead of the holiday, prices rallied over $3 a barrel for US crude last week on expectations of record demand from US motorists over the long holiday weekend, despite near record pump prices.

The next snap-shot on the state of US fuel inventories will be released tomorrow, a day later than usual because of the Independence Day holiday.

US unleaded petrol prices average at $2.932 a gallon, according to the American Automobile Association, just below the record of $3.056.

The peak was struck in September last year after massive hurricane damage with forecasters predicting another active US hurricane season.

“The bull run is back and the hurricane season lies ahead,” said Deborah White of Société Général Corporate and Investment Bank (SG CIB) in a research note.

The investment bank has predicted this season could see hurricane-related losses of 33 million barrels of oil, as well as 25m barrels of oil equivalent of natural gas and 20m barrels in light products, such as petrol.

“The ‘triple whammy’ would certainly send crude heading through the $80 a barrel mark,” SG CIB said.

US crude has already rallied by around 20% from the end of last year, pushed higher by anxiety about oil- producer Iran’s dispute with the West over its nuclear programme, as well as disruption of oil output by militant unrest in Nigeria.