May 3: Oil prices extended gains above $86 a barrel on Monday as traders eyed whether a massive crude spill in the Gulf of Mexico would slow imports to the US.
By early afternoon in Europe, the benchmark crude for June delivery was up 32 cents to $86.5 a barrel in e
lectronic trading on the New York Mercantile Exchange. The contract rose 98 cents to settle at $86.15 on Friday.
Some analysts expect the 30-mile (48-kilometer) oil slick caused by as much as 210,000 gallons (795,000 litres) of crude gushing into the Gulf each day could undermine imports to key Louisiana terminals, helping to lower crude inventories and boost prices.
The US authorities have said imports have not yet been affected.
“The potential disruption of oil tanker traffic in the Gulf of Mexico is already having an impact on oil prices.” Goldman Sachs said in a report.
“Traffic of oil service boats and oil tankers through the Gulf will likely be slowed.” Oil is near an 18-month high of $87, last touched in early April. Investors are also mulling a recent jump of the US crude supplies, a sign demand hasn't rebounded along with the overall economic recovery.
“The past two weeks have brought weak the US oil inventory data that puts into question the much stronger macroeconomic data,” Goldman said. It also expects prices to touch $94.50 a barrel in three months and to $99 a year from now.
Oil prices rose on Monday despite a stronger dollar — which makes oil costlier for investors in other currencies — and weaker in the equity markets, factors which usually tend to push crude lower.
“Due to the market’s selective perception of events, factors supporting prices are drawing more attention than adverse news for prices, especially as the oil disaster in the Gulf of Mexico is providing further support,” said a report from Commerzbank.