LONDON (Reuters) – Oil prices hit a one month-high of $47 a barrel on Tuesday as China showed no let-up in its strong import growth and traders worried that U.S. petroleum inventories had drawn down heavily due to Hurricane Ivan.
Supply worries were underpinned by concerns about exports from Russian oil giant YUKOS as well as rising tensions between Iran and the United Nations over Tehran’s nuclear ambitions.
New York light crude futures rose 55 cents to $46.90 per barrel, only $2.50 below the record peak struck in August, after touching a $47.18 high.
London Brent gained 49 cents to $43.40 after climbing 46 cents on Monday when YUKOS, Russia’s embattled top producer, said it was trimming supply to China for the rest of this year due to a lack of funds.
Oil prices have jumped more than 40 percent this year as strong demand growth in the U.S. and Asia stretches global supplies.
Chinese data on Tuesday showed oil imports rising 37.4 percent year-on-year in August, holding close to 40.7 percent growth seen in July.
Indian government data also showed oil firms processing 4.4 percent more crude in August than a year earlier.
OPEC oil producers are pumping at full tilt to meet demand, but their low-quality oil is proving unpopular with refiners because of its low yield of prized transport fuels.
The strong demand has magnified the impact of any threat to international supplies, such as Hurricane Ivan’s rampage through the U.S. Gulf last week.
The recent spate of storms is expected to translate into lower U.S. oil inventory levels when the government Energy Information Administration releases its weekly supply report on Wednesday.
A Reuters analyst survey forecast U.S. crude inventories to fall by 5.5 million barrels in the week to Sept 17. That would make an eighth week of stockpile draws, bringing inventories to their tightest in more than six months.
The survey of 11 analysts also predicted a 1.1 million barrel draw on distillate inventories, which are increasingly in focus ahead of the northern hemisphere winter.
Gulf of Mexico producers are restarting their operations in the wake of the storm, with only 700,000 barrels per day of crude output left shut as of Monday, but companies are discovering damage that could slow a resumption of normal production.
ChevronTexaco (CVX.N: Quote, Profile, Research) said on Monday crews discovered structural damage at “numerous” oil and gas production platforms on its Bay Marchand field.
Longer term worries over the security of Middle Eastern supply are also underpinning prices.
“Potential for expanded Middle East tension is likely to provide fundamental support for prices following reports of Iran’s refusal to comply with the IAEA’s demand that it halts all uranium enrichment activities,” said Standard Bank in a report.
This week, Iran rejected international calls to comply with a U.N. International Atomic Energy Agency demand that it stop uranium enrichment. Tehran denies hostile designs, saying its nuclear program has only peaceful aims.
On Tuesday, Israeli security sources said the United States planned to sell Israel $139 million worth of air-launched bombs, including 500 “bunker busters” able to penetrate Iran’s underground nuclear facilities.