Oil climbing towards $70

26 May 2010

Written by John King

Crude oil prices were rising towards $70 (£48.50) a barrel on the New York Mercantile Exchange this morning (May 25th), driven by an expected upswing in demand for gasoline.

According to a report from the American Petroleum Institute showed gasoline stocks fell by an unexpectedly large margin last week, with inventories declining by 3.2 million barrels.

Demand for gasoline escalates in the warmer months and typically peaks in the US on the July 4th holiday weekend. Obversely, demand for heating oil tends to support oil prices in the winter months.

Speaking to Reuters, Keichi Sano, general manager of research at SCM Securities in Tokyo, commented: "The sentiment of the market is too bearish due to EU problems and that affects people's attitude to take on risk. But it's already factored into the price, and $70 will be good support this time."

Heating oil prices were also climbing in the Asian trading session this morning, recovering from sharp losses yesterday.