World
 
|
Oil prices rebound but stay close to 10-month low
By Isabelle Tourne
AFP
NEW YORK
Petroleumworld.com 10 13 06
Crude oil prices rebounded Thursday but held close to a 10-month low with traders uncertain about whether and how the OPEC cartel will cut its production.
The rebound came after a heavier-than-expected drop in heating fuel stocks in the United States and the closure of two Norwegian oil platforms.
New York's main contract, light sweet crude for delivery in November, rose 27 cents to close at 57.86 dollars a barrel.
In earlier electronic trade, the contract plunged to 57.22 dollars -- New York's lowest level since December 19, 2005, and a 27-percent plunge from its record high of 78.40 dollars in mid-July.
In London, Brent North Sea crude for November delivery added 11 cents to 58.76 dollars a barrel, having earlier dropped to a low of 58.16 dollars.
The US Department of Energy said Thursday that inventories of distillates, used for heating oil and diesel fuel, tumbled 1.6 million barrels to 149.9 million in the week to October 6.
That compared with analysts' consensus forecasts for a drop of only 125,000 barrels.
Crude oil reserves surged 2.4 million barrels to 330.5 million -- much more than the rise of 1.5 million barrels expected by energy traders.
"It is refinery maintenance season, when crude stocks build and product stats start to draw (fall)," said Calyon analyst Mike Wittner, who added that the situation was "absolutely normal".
Reserves of US gasoline or petrol, meanwhile, crept up 300,000 barrels to 215.4 million, compared with expectations for a fall of 450,000 barrels.
Crude futures began Thursday in negative territory, but cut their losses after news that Norway, the world's third-biggest oil exporter, had suspended production on two coastal oil platforms.
The closure of the Draugen and Snorre A platforms would reduce Norwegian production by 200,000 barrels of oil per day, representing almost 10 percent of the country's production.
The Petroleum Safety Authority of Norway ordered the closure of the platforms one day after 39 life rafts on eight offshore platforms were found to be in violation of safety requirements.
"This is a warning that they will halt production if these safety issues are not fixed, so there is no production outage yet, which is the main thing," Wittner said.
The market has meanwhile been waiting more than two weeks for a clear signal from the Organisation of the Petroleum Exporting Countries (OPEC) in reaction to plunging crude prices.
The 11 members of the cartel have agreed to slash output by a million barrels per day (bpd), in a move aimed at shoring up prices, according to its Nigerian president.
But analysts were awaiting exact details of the cut, and noted that some OPEC members like Nigeria and Venezuela are already struggling to meet their official output quotas now.
"The logistics of a cut -- if it were to come -- remain unclear," AG Edwards analyst Bill O'Grady said.
"These below-quota nations would prefer a quota cut which would mean they would not have to reduce output. Needless to say, the nations over quota have less interest in a quota cut and prefer an across-the-board reduction.
"This is why the cartel is having such a hard time making cuts and why we believe the odds of a full 1.0 million bpd reduction are low," he said.
Since striking record highs over the summer, world crude futures have crashed on fading geopolitical tensions in the Middle East, an uneventful US Atlantic hurricane season, and bulging US energy stockpiles.
"The (US) build in crude oil was bigger than expected but if OPEC takes crude off the market, it will probably begin to drop and that is what the market fears," Deutsche Bank analyst Adam Sieminski said.
AFP 12 1919 GMT 10 06
Copyright ©2006 AFP. All Rights Reserved.
Your
feedback is important to us!
We invite all our readers to share with us
their views and comments about this article.
Write to editor@petroleumworld.com
Any
question or suggestions, please write to:
editor@petroleumworld.com
Best
Viewed with IE
5.01+
Windows
NT 4.0, '95, '98 and ME +/ 800x600 pixels