Oil hits USD 70 early Monday

The New York crude oil price hit USD 70 per barrel on Monday for the first time August 31, just after hurricane Katrina ravaged the coast of America.

The main cause of the rise was a combination of upstream and downstream supply fears.

Rising tensions with Iran over its nuclear programme increased fears on the upstream side, as Iran admitted last week that it had enriched uranium, one of the steps to making a nuclear bomb.

Downstream, the main reason for the rise was fears about supply of gasoline in the US, now that refineries, already at stretched capacity, have to switch additives from methyl tertiary butyl ether (MTBE) to more environmentally friendly ethanol.

Reports showed that US gasoline inventories showed an unseasonal fall during the first week of April.

May delivery crude oil therefore hit USD 70 on the New York Mercantile Exchange.

Brent crude had already pierced USD 70 in Friday. Oil prices have shot up 20% since the middle of February.