Oil rises above $70

Oil prices rose above $70 on Wednesday as US warships put on a show of force off Iran's coast, coinciding with a United Nations agency report that said the Islamic republic had expanded its nuclear programme.
US data showed gasoline stocks rose last week by more than forecast, but analysts said inventories in the world's top consumer remained below average. With summer driving season and peak demand looming, refinery problems sent pump prices to a record $3.22 a gallon this week.
London Brent crude, currently a better indicator of the global market than US oil, settled up $1.08 at $70.60 a barrel. US crude was up 26 cents at $65.77.
Nine US warships carrying 17,000 personnel entered the Gulf on Wednesday. Navy officials said it was the largest daytime assembly of ships since the Iraq war began in 2003.
They added Iran had not been notified of plans to sail the ships, including two aircraft carriers, through the Strait of Hormuz, a narrow channel in international waters off Iran's coast and a major artery for global oil shipments.
The International Atomic Energy Agency found in a report that Iran has expanded uranium enrichment activity, ignoring a UN Security Council deadline to stop it "The US Navy is sending two aircraft carriers into the Gulf for training manoeuvres, on the day of the IAEA Iranian report," said Olivier Jakob, analyst at Petromatrix.
"We are still of the opinion that this is more a symbolic show of force than anything else." At the White House, a spokesman called the IAEA report "a laundry list of Iran's continued defiance of the international community." French President Nicolas Sarkozy was quoted as saying Iran must decide whether it wants to cooperate with the international community or face harsher sanctions.
A weekly snapshot of US oil stocks showed gasoline stocks increased by 1.5 million barrels, exceeding the 1.4 million barrels forecast. But despite record high prices, year-on-year demand accelerated 1.2 percent over the past four weeks.
The Memorial Day holiday this weekend marks the start of the summer driving season in the United States. "We need to build 2 million barrels per week for the next eight weeks to get within the bottom range of the five-year averages" for gasoline, said Nauman Barakat, senior vice president at Macquarie Futures USA. "There's an increase in (refinery) runs, but where are the barrels?"
Oil hit a nine-month high of $70.83 on Monday, lifted by strong US gasoline and attacks on oil facilities in Nigeria, the world's No 8 oil exporter. Technical analysts at Barclays Capital put initial support for Brent at $69.10 and resistance at $71.