World
 
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Oil prices rebound despite buoyant US inventories
AFP
NEW YORK
Petroleumworld.com 09 28 06
World oil prices staged a technical rally Wednesday to bounce back above 60 dollars a barrel despite a large increase to US stockpiles of fuel.
Helped by hawkish remarks from the OPEC cartel, New York's main contract, light sweet crude for delivery in November, advanced 1.95 dollars to close at 62.96 dollars a barrel.
In London, Brent North Sea crude for November delivery rose 2.09 dollars to settle at 62.21 dollars a barrel.
Both contracts had extended a recent slump earlier in the day to fall below the 60-dollar mark. The recovery came despite what analysts called a "bearish" weekly inventories report by the US Department of Energy.
The DoE said that reserves of gasoline (petrol) showed an increase of 6.3 million barrels to 213.9 million in the week to September 22. That was almost six times analysts' consensus forecasts and the biggest rise in five years.
"The amazing thing in this week's numbers was the gasoline build," said Societe Generale analyst Deborah White.
Inventories of distillates jumped by 2.6 million barrels to 151.3 million -- nearing an eight-year high -- compared with forecasts of a gain of 2.5 million.
Ahead of the northern hemisphere winter, the market's focus has switched from gasoline to the level of distillates, which include heating fuel.
Crude oil reserves, meanwhile, fell a modest 100,000 barrels to 324.8 million.
Markets were expecting a drawdown of 1.7 million barrels.
"A huge gasoline build, sizable distillate build and slight crude draw make this a price bearish report," said Wachovia Securities economist Jason Schenker.
But White said that technical buying by speculators had kicked in around the 60-dollar level, after oil prices had retreated about 20 percent from record highs hit in July.
"There's pretty good psychological support at 60 (dollars) so people tend to buy on the dip," she noted.
Fimat USA analyst Mike Fitzpatrick said "the rebound is more technical after prices reached recently their lowest levels".
James Williams at WTRG Energy agreed that "everything was bearish in the (DoE) report".
"At the same time, OPEC is thinking about cutting its production. So prices went up because with a bearish report, OPEC is more likely to cut its production," he said.
"And the futures market is betting that that is going to happen."
The head of the Organization of the Petroleum Exporting Countries called Tuesday for the 11-nation cartel to take action to prevent further price declines.
OPEC president and Nigeria's oil minister Edmund Daukoru said oil prices are "very low".
Addressing reporters in Abuja, Nigeria, he added: "We are already talking among ourselves in the OPEC fold ... Something needs to be done to steady the price."
OPEC kept its official quota steady at 28 million barrels per day at its last meeting in September, but said it could call an emergency meeting if necessary. The next meeting is due on December 14 in Abuja.
AFP 280536 GMT 09 06
Copyright ©2006 AFP. All Rights Reserved.
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