20 July 2005, 18:35  Oil prices shot up after the United States embassy warned about militants' fresh attacks

Oil prices shot up on Wednesday after the United States embassy in Saudi Arabia warned that militants were planning fresh attacks in the world's number one oil exporter. The warning added to gains as traders awaited U.S. inventory data expected to show recent Gulf of Mexico hurricanes eroding robust crude inventory levels in the world's top consumer. U.S. light, sweet crude oil futures traded up 83 cents at $58.29 a barrel. The contract had fallen to its lowest levels since July 1 at $56.80 on both Monday and Tuesday. London Brent crude rose 73 cents to $58.10 a barrel after gaining 37 cents on Tuesday. The U.S. embassy in the Saudi capital Riyadh advised U.S. citizens it had received indications that militants were planning attacks in the kingdom. The embassy gave no details on when the attacks might take place, or against what targets. Militants have killed 91 foreign nationals and Suadi civilians in the last two years. The U.S. consulate in Jeddah came under attack in December. "We've had several bombings in Saudi Arabia in the last few years and every one of them has caused a spike in the oil futures market but not one of them has affected oil production," said Anais Faraj, global strategist at investment bank Nomura. Ahead of the warning, oil prices had already risen as U.S. crude stockpiles were forecast to fall 3.7 million barrels in the week to July 15 after Hurricane Dennis delayed imports and disrupted Gulf production, a Reuters survey of analysts showed on Tuesday. The data is due at 1430 GMT. Inventories have already dropped 4 percent from their six-year peak in mid-May as refiners run at nearly full throttle, but they remain in the upper half of their normal seasonal range. Dealers are more concerned about stocks of distillates, including diesel and heating oil, supplies of which have been tested by unusually strong demand. Stockpiles are forecast to have grown 1.7 million barrels last week to stand nearly 20 percent above their late-April low, when tanks were near the bottom of their seasonal norm. The growing inventory buffer will soothe some anxieties over refiners' ability to meet peak demand this winter, although many still fear the taut global supply chain is ill-prepared to deal with any unexpected outages. "Prices remain elevated above fundamental levels by a risk premium related to various supply concerns, geopolitical tensions and speculation on futures markets," said Gerard Burg, minerals and energy economist at National Australia Bank Ltd.

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