Oil Price Still in $71

Oil prices held above $71 a barrel on Monday, underpinned by tight gasoline inventories in the United States and expectations of a recovery in refinery use in the world's top consumer.

Crude was little moved by security concerns that rippled through European financial markets after failed car bombing attempts in London and an attack on Glasgow's airport over the weekend, weighing on stocks and boosting government bonds.

"Crude prices are being supported by concerns about gasoline and general expectations of a tightening market," Mike Wittner, oil analyst at investment bank Calyon in London, said.

London Brent crude was down 12 cents at $71.29 a barrel by 1600 GMT. U.S. crude fell 73 cents to $69.95, after settling on Friday at the highest price since August.

Oil output disruptions in Nigeria, and supply cuts by the Organization of the Petroleum Exporting Countries, have helped Brent climb 17 percent this year.

Britain raised its security rating to the highest level after the car bombing attempts and the airport attack over the weekend. Analysts said they expected oil to react little to the developments.

"The oil market will take these thwarted London bombings in its stride because it is used to dealing with more direct threats to supply," Calyon's Wittner said.

Oil has been supported this year by violence in Nigeria and Iraq that has cut supplies, as well as traders' concern that Iran's dispute with the West over its nuclear work could affect the country's oil exports.

U.S. HOLIDAY

The U.S. Independence Day holiday on July 4 will delay until Thursday weekly U.S. inventory data, which some analysts expect will show higher fuel production and a drop in crude oil stocks as refinery activity increases. U.S. crude oil stocks are currently at a nine-year high.

"U.S. crude oil stocks will draw in the next two months as there is little room to build further and as refineries increase their intake," said Olivier Jakob, analyst at Petromatrix.

ConocoPhillips (COP.N: Quote, Profile , Research) planned to begin a restart of a gasoline-making unit in Texas on Friday, while one of two shut crude units at a BP (BP.L: Quote, Profile , Research) refinery in Indiana will reach full rates within two to three weeks.

U.S. crude oil futures have been trading at an atypical discount to Brent since February amid high stocks of crude oil in inland markets. The discount fell sharply last week as refineries in the Midwest that draw their supplies from Cushing, Oklahoma, the delivery point for U.S. crude futures, began to resume normal operations.

However, the shutdown of a refinery in Kansas that is supplied from Cushing pushed the discount back over $1 per barrel on Monday.

Coffeyville Resources shut a 108,000 bpd refinery in Coffeyville, Kansas, over the weekend after severe flooding.

source:investing.reuters.co.uk