Oil prices inch higher after Iran test-fires missiles

Source: Agencies  |   2008-7-10  |     ONLINE EDITION

OIL prices finished about where they began yesterday after jumping more than US$2 earlier on reports of lower US oil stockpiles and an Iranian missile test.

Light, sweet crude for August delivery rose a penny to settle at US$136.05 a barrel on the New York Mercantile Exchange, but prices shifted between positive and negative territory as traders parsed details of the inventory report following its midmorning release. In aftermarket trading, oil prices fell 40 cents to US$135.64 a barrel.

The moves follow two days of steep declines that left prices 6.4 percent below last week's record high.

Figures from the Energy Information Administration showed US oil supplies fell by 5.9 million barrels last week, a decline of 2 percent. That is far above the 1.9 million barrels forecast by analysts surveyed by the energy research firm Platts.

Prices often rise in response considerably to large drops in US oil supplies. But Jim Ritterbusch, president of energy consultancy Ritterbusch and Associates, noted that much of this week's inventory decline was concentrated on the West Coast and was not representative of supplies overall.

"Whenever it's out on the West Coast region, the impact is blunted appreciably," he said.

In addition, gasoline stockpiles rose more than expected, partly offsetting the decline in crude. Inventories of distillate fuel, which include diesel and heating oil, also rose, but less than analysts anticipated.

Prices rose as high as US$138.28 earlier in the day following reports that Iran's elite Revolutionary Guards fired missiles during war games that officials said were meant to show that the key oil producer can retaliate against a US or Israeli attack, state television reported.

The barrage was said to include a new version of the Shahab-3 missile, which officials have said has a range of 1,250 miles. That makes it capable of striking Israel, Turkey, the Arabian peninsula, Afghanistan and Pakistan.