NEW YORK – Oil prices jumped more than a dollar on Thursday as fears mounted that disruptions to Iraqs oil exports due to sabotage attacks could tighten the global market while the United States struggles to build up fuel supplies for summer driving season.
U.S. crude oil futures on the New York Mercantile Exchange (search) settled $1.14 higher at $38.46 a barrel, reversing a 12 percent slide since early June when OPEC (search) announced it would raise production to cool red-hot prices.
In London, Brent crude settled up $ The gains came after attacks on Iraqs pipelines earlier in the week halted exports from the countrys southern terminal near Basra. Dealers said they doubted estimates by Iraqs South Oil Co. Thursday that exports would resume at 700,000 bpd as early as Friday.
"From what we have seen when it comes to Iraqi repair estimates, these timetables seldom come in on schedule," said Edward Meir of Man Financial Energy Group (search) in London in a market commentary before the opening of dayside trade.
Also underpinning gains were lingering concerns over fuel supply levels in the United States, the worlds largest energy consumer.
The U.S. government said in a report on Wednesday that gasoline supplies fell last week by 500,000 barrels to 205.9 million barrels -- 8.3 million barrels below the five-year average -- just as summer driving season hits.
Summer driving season in the United States traditionally starts at the end of May, when motorists take to the roads in greater numbers for vacations and make up roughly 12 percent of global energy consumption.
News that oil major BP was forced to halt barge loadings from a big refinery in Rotterdam due to a fire added to concerns about steady flows of fuel to consuming markets. BP said, however, that fuel shipments could still be loaded out of the refinery by pipeline and sea-going vessels.
The strength came against the backdrop of a steep decline in oil prices from record highs over $42 since early June, triggered by expectations that producer-group OPEC would ramp up shipments to its customers.
OPEC decided to increase production quotas by two million barrels-per-day (bpd) from July 1 and by another 500,000 bpd from August 1, but tanker-tracker Petrologistics said this week some 800,000 bpd of extra oil is expected in June.
That would bring OPEC production to its highest level in nearly four years.