Crude oil traded around $109 a barrel as investors looked to commodities for higher returns and refinery disruptions tightened global distillate markets.

Commodities investments rose more than 20 percent in the first quarter, as investors sought a buffer against rising inflation and a weaker dollar, Citigroup Inc said. A fire at Neste Oil Oyj's Porvoo, Finland, refinery on Friday will keep the plant's low-sulfur diesel production offline through May, tightening European diesel and gasoil markets.

"There are no signs yet of prices cracking," said Robert Montefusco, a broker at Sucden (UK) Ltd in London. "The funds are pouring in and technically things look strong. Prices have held above $100 a barrel quite well."

Crude oil for May delivery was at $109.32 a barrel, up 23 cents, at 10:01 am London time in after-hours trading on the New York Mercantile Exchange. Prices are up about 70 percent from a year ago. On Monday, futures rose $2.86, or 2.7 percent, to settle at $109.09 a barrel, the highest close since March 18.

"Investment flows have been a factor in the volatility but I can't believe the new investment has taken us to $100 oil," said Jonathan Kornafel, a director for Asia at Hudson Capital Energy in Singapore. "The fundamentals are what have gotten us here."

Gasoil futures traded in London reached a record $1,012.25 a metric ton at 9:31 am, up 0.8 percent, as Neste became a buyer of diesel cargoes, said Vienna-based JBC Energy in a note to clients yesterday. Gasoil is the European equivalent of heating oil and is used as a pricing benchmark for diesel and jet fuel.

Brent crude for May settlement was down 30 cents at $106.84 a barrel on London's ICE Futures Europe exchange. The contract rose $2.24, or 2.1 percent, to settle at $107.14 a barrel on Monday, the highest close since March 14.

US crude oil supplies probably climbed last week because of higher imports and reduced refinery operations amid low processing profits.

Inventories advance

Crude oil inventories advanced 2.5 million barrels in the week ended April 4 from 319.2 million barrels, according to the median of responses by 10 analysts before this week's Energy Department report today.

Gasoline inventories probably dropped 2.75 million barrels from 224.7 million barrels the week before, according to the median of responses. Supplies of distillate fuels, a category that includes heating oil and diesel, fell 1.5 million barrels from 109.7 million the prior week, according to the survey.

Agencies

(China Daily 04/09/2008 page17)