Crude oil prices up on Olmert resignation announcement

Crude oil prices rebounded Wednesday after Israeli Prime Minister Ehud Olmert announced that he will resign effective in September, raising worries that a more hawkish successor could make an Israeli attack against Iranian nuclear facilities a virtual certainty.

Prices were already on the rise before the announcement, after the US Energy Information Administration reported that gasoline inventories declined by 3.5 million barrels in the week ending 25 July when it had been expected to rise by 400,000 barrels.

Stockpiles of crude oil were also down, but only by 100,000 barrels rather than by the 1.3 million barrel decline that had been anticipated, while distillates in storage gained 2.4 million barrels last week, more than the expected 1.8 million barrel increase.

September contracts for West Texas Intermediate ended the floor trade session on the New York Mercantile Exchange up $4.55 to $126.73 per barrel and had been up as much as $5.01 to $127.20 per barrel shortly before the close.

Brent crude added $4.70 to $127.41 per barrel on the ICE Futures Europe exchange in London.

Also sending prices higher was a statement from Royal Dutch Shell (LSE: RDSA, RDSB; NYSE: RDS.A, RDS.B) that a recent pipeline attack in Nigeria could leave it unable to fulfill some of its contractual obligations.