Oil price hits $76, highest since October
LONDON: Oil prices rose on Thursday, reaching 76 dollars a barrel in London and the highest level this year, but analysts said they expected a renewed move downwards owing to weak demand for crude.
Brent North Sea crude for delivery in September reached 76 dollars in early London trade. It later stood at 75.93 dollars a barrel, up 42 cents on Thursday's close.
New York's main contract, light sweet crude for September, gained 32 cents to 72.29 dollars a barrel.
Both contracts closed higher on Wednesday as investors returned to commodities including oil, drawn by the weakening US currency which makes crude futures an attractive investment option, traders said.
Crude futures are priced in the US currency and become cheaper when the dollar falls.
"The rally in oil prices is likely to falter," analysts from London-based Capital Economics consultancy said in a report.
"Many forecasts still seem to be overly influenced by the boom that started in 2004. But final demand is set to remain weak for years."
Data released on Wednesday by the US Department of Energy (DoE) painted a mixed picture of oil demand in the United States, the world's biggest energy user.
The widely monitored DoE report said US crude oil stockpiles soared by 1.7 million barrels in the week ending July 31, three times more than the average analyst projection.
Inventories of distillates, which include diesel and heating fuel, sank by 1.1 million barrels, instead of the 900,000-barrel increase expected.
Gasoline reserves fell by 200,000 million barrels, far less than the drop of 1.3 million barrels anticipated.