Oil eases before US inventory data

Attention: open in a new window. PDFPrintE-mail

Commodities - International Oil Report

LONDON (AFP) - Oil prices fell slightly on Wednesday ahead of data on US energy stockpiles and amid expectations that a spike in heating fuel demand caused by cold weather across the northern hemisphere will tail off.
New York s main futures contract, light sweet crude for delivery in February, dipped two cents to 81.75 dollars a barrel. Brent North Sea crude for February delivery shed 10 cents to $80.49 in London trading.
A weather event is dominating the oil headlines, said PVM broker oil analyst David Hufton. Cold weather in the US and Europe has increased demand for heating fuel, in turn driving oil prices higher earlier in the week.
It s cold all over the world, (which is) definitively adding to oil demand, but the American weather looks it is going to ease up, so it s slightly bearish for oil prices, said independent analyst Ellis Eckland.
Markets were meanwhile awaiting the latest weekly snapshot of energy inventories in the United States, the world s biggest consumer.
Amid cold weather, stockpiles of distillates which include heating fuel are expected to have fallen by 1.8m barrels last week, according to analyst consensus reported by Dow Jones Newswires. Phil Flynn at PFG Best said the market appeared to have won support from the notion that government stimulus, including ultra-low interest rates from the Federal Reserve, will help keep the economic recovery on track.
It is not so much the transitory issue that we are freezing that inspired the big move (in prices) but a growing sense that interest rates will be frozen for a longer time than the market anticipated, he said.
Flynn added that the rally had been sparked by dovish comments over the weekend from Fed chairman Ben Bernanke, who suggested no quick move away from near-zero rates even amid signs of a strengthening economy. This rally was about more than just weather, he said. This was about the changing attitudes of when the Fed will raise rates. Oil prices began 2010 with a bang on Monday, soaring by more than two dollars as freezing temperatures spread. Reports that Russia had cut supplies to Belarus also helped push prices higher, dealers said. Officials in Belarus denied the reports, however.

Courtesy : The Nation


Forex open Market rates & comments Archive

Login Form