31 Jul 2008

Price of oil rises to almost $US123/b

6:09 am on 31 July 2008

Oil has rebounded in price to $US123 a barrel after a drop in gasoline stocks last week in the United States.

The US Energy Information Administration said gasoline inventories fell by 3.5 million barrels. Gasoline production dropped and imports fell. US crude oil stocks dropped by 100,000 barrels.

US crude rose 83 cents to $US123.02 by 1519 GMT on Wednesday - compared to a low of $US120.42 on Tuesday, the lowest since 6 May. London Brent rose 56 cents to $US123.27.

Oil is down from a record high of $US147.27 on 11 July.

The price is partly due to tension over Iran's nuclear programme. Iran is the second-largest producer in the Organization of the Petroleum Exporting Countries.

The country's highest authority, Supreme Leader Ayatollah Ali Khamenei, said on Wednesday that Iran will pursue its nuclear path.

Western powers gave Iran two weeks from 19 July to respond to an offer to hold off on imposing more U.N. sanctions on Iran if Tehran would freeze any expansion of its nuclear work.

In Nigeria, Royal Dutch Shell declared force majeure on exports after parts of a key pipeline were blown up earlier this week.