Oil prices jumpWORLD oil prices swung higher overnight after a...

Oil prices jump

WORLD oil prices swung higher overnight after a US government report showed petrol stockpiles slumped last week by much more than expected, ahead of the peak demand season for motor fuel.

Traders also kept a keen eye on major crude producer Iran, which remains in the international spotlight over its disputed nuclear energy ambitions.

New York's main oil futures contract, light sweet crude for delivery in May, closed up 12 cents at $US62.01 per barrel after striking $US62.56 earlier overnight.

In London, the price of Brent North Sea crude for May delivery settled up 42 cents at $US67.84 per barrel, retreating from $US68.89 in earlier deals.

The drop in petrol inventories "was the biggest surprise in the (latest) data and nothing else may matter all that much in the near term," Citigroup analyst Tim Evans said.

The US Department of Energy said overnight that inventories of US petrol plunged by 5.5 million barrels to 199.7 million in the week to April 6. Analysts had forecast a drawdown of 1.4 million barrels.

"A surprisingly massive gasoline inventory draw is likely to push up gasoline contract prices and prices at the pump," said Jason Schenker at Wachovia Securities.

Petrol stockpiles are a crucial focus for the market ahead of the so-called US driving season that starts next month and sees many Americans hit the highways for their holidays.

American refineries are meanwhile unable to convert enough crude into petrol owing to stretched production and limited refining capacity in the United States, according to industry experts.

Aside from US stockpiles, traders tracked the headlines on Iran.

On Wednesday, the European Union had urged Tehran not to defy the United Nations, increasing international diplomatic pressure on Tehran after its claim that it could enrich uranium on an industrial scale.

Uranium enrichment is the key sticking point in the row between Iran and the West because the process can also make the fissile core for an atomic bomb. Western powers accuse Tehran of seeking to acquire nuclear arms while Tehran insists its program is for power generation only.

Iran is the world's fourth-largest crude exporter and a key member of the Organization of the Petroleum Exporting Countries, and analysts fear that further sanctions in the ongoing dispute over the program could disrupt oil exports

http://www.news.com.au/adelaidenow/story/0,22606,21543339-5005962,00.html