US gasoline supplies registered a 5.4 million-barrel draw to 211.8 million barrels in the week to 31 March the steepest weekly fall in more than two-and-a-half years. Distillate stocks also fell sharply, but remain up year on year. The drop is partly a seasonal phenomenon, as refiners clear their storage tanks of winter fuel and prepare for the summer driving season. It is being exacerbated this year by the need to prepare facilities for new product specification requirements coming into force in May. Refinery utilisation was running at about 85.9 per cent in the final week of March, down from 87 per cent a week earlier and from 94 per cent at the same point in 2005.

'Gasoline inventories have continued their fall, with the reduction concentrated on the East Coast,' says Paul Horsnell, analyst at Barclays Capital. 'The change in specification appears to be having an impact on levels as the inventory starts to turn over, but that still leaves the question as to how effectively inventories can be rebuilt.'

About a fifth of Nigerian output remains shut off due to militant threats and attacks, although Oil Minister Edmund Daukoru said on 3 April that the 115,000-barrel-a-day (b/d) EA field, operated by the Royal Dutch/Shell Group, would come back on stream within days. However, there has been no indication of when production will restart at Shell's 340,000-b/d Forcados field. Government officials met with rebel leaders on 5 April, which Daukoro said he hoped would ease the tension in the Niger Delta.

However, with simmering political tension over Iran and the ever-present danger of chaos worsening in Iraq, geopolitics is set to provide continuing support to prices over the medium term. The price of the OPEC basket in both dollar and euro terms reached an all-time high in early April.