SINGAPORE – Oil prices retreated from record territory but held above $75 a barrel on Thursday as gasoline demand — and geopolitical tensions — remain high.
The Energy Department said Thursday that U.S. gasoline consumption over the past four weeks averaged 9.5 million barrels a day, or 1.4 percent more than a year ago.
In Nigeria, armed men kidnapped a Dutch oil worker, the second hostage taking in less than 24 hours in a region where regular raids continue to destabilize oil production. Attacks on oil pipelines and kidnappings have cut Nigerian oil production by more than 500,000 barrels a day, or 20 percent, this year.
Iran remains in a stalemate with the West, which is concerned about Tehran's nuclear ambitions, and President Bush said Thursday the United States will seek a diplomatic solution to a nuclear standoff with North Korea, which test-fired missiles earlier in the week.
Light sweet crude for August delivery fell 5 cents to settle at $75.14 a barrel on the New York Mercantile Exchange, where gasoline futures declined by 2.10 cent to close at $2.259 per gallon. Heating oil futures were essentially unchanged at $2.0616 per gallon.
On Wednesday, oil futures touched an intraday record of $75.40 before settling at $75.19, an all-time closing high on Nymex, where oil trading began in 1983.
August Brent crude on London's ICE Futures exchange slid 30 cents to $73.68 a barrel.
In other Nymex trading, natural gas futures declined by 10.1 cents to settle at $5.664 per 1,000 cubic feet — the lowest closing price since Sept. 27, 2004. The country is awash in natural gas and some analysts believe there may not be enough underground storage capacity, potentially forcing some producers to shut-in wells. Others say the falling price will spark more demand.
America's growing motor-fuel appetite comes despite an average nationwide pump price that is just pennies below $3 a gallon — a level many analysts once believed would sap consumption.
"Sharply higher energy prices have not dampened global economic growth, which remains healthy, nor have they spurred a rise in inflation, which remains at historically low levels," Oppenheimer & Co. oil analyst Fadel Gheit said in a research note.
In its weekly inventory report, the U.S. Department of Energy said commercial inventories of crude oil declined by 2.4 million barrels last week to 341.3 million barrels, or 3.6 percent above year ago levels. The country's supply of gasoline unexpectedly rose by 700,000 barrels to 213.1 million barrels, or 1.4 percent lower than a year ago.
Some traders said Wednesday that the North Korea missile tests added uncertainty about the global political situation to a market already jittery over issues affecting producers such as Iran's standoff with the international community over its nuclear program and violence in Nigeria and Iraq.