Oil prices boosted by falling stocks, concerns over Iraq
Oil prices stormed to their highest level in three months this week, buoyed by a spectacular drop in US oil inventories, renewed optimism on Wall Street and ongoing speculation of a US-led attack on Iraq.
The US energy department said Wednesday stocks of crude oil fell 7.2 million barrels, or 2.3 percent, to 300 million in the week ended August 9, while gasoline stocks fell 4.5 million barrels.
Analysts said the market also drew strength from persistent speculation about a US-led attack on Iraq, which dealers worry would destabilise the Middle East oil producing region.
US President George Bush's national security adviser, Condoleezza Rice, said Thursday the West did not have "the luxury of doing nothing" to remove Iraqi leader Saddam Hussein.
And the recovery in US stock prices, which boosted hopes the US economy may avoid a "double-dip" recession, provided the market with an additional pillar of strength.
Wall Street's return to form, coupled with some better-than-expected figures on US industrial output, helped propel base metal prices higher as the market recovered from recent low points.
And the rally in US stock prices failed to damage sentiment in precious metals markets, with gold ending the week slightly higher.
