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Oil prices show modest rise after huge fall in US crude stocks
AFP
NEW YORK
Petroleumworld.com 12 29 06World oil prices firmed slightly on Thursday, showing little reaction to a massive drop in stockpiles of US crude last week.
New York's main contract, light sweet crude for delivery in February, climbed by 19 cents to 60.53 dollars per barrel in closing trades.
In London, Brent North Sea crude for February delivery won 15 cents to settle at 60.67 dollars.
"The markets seem to have assumed a year-end liquidation mode with a singular focus on weather," Fimat analyst John Kilduff said.
The US Department of Energy said Thursday that crude oil stockpiles slid 8.1 million barrels to 321 million in the week ended December 22. The drawdown was much steeper than the 2.5-million-barrel decline expected by Wall Street analysts.
Phil Flynn at Alaron Trading said the market understood that much of the drop was due to shipping problems caused by fog near the port of Houston.
"There was a little bit of bounce after the report," he said.
"But most people decided to take their profits because they realized that the draw in crude was mainly due to the fog in the Houston channel last week."
Flynn said he expected crude supplies to show a rebound next week of six to eight million barrels.
The DoE report showed levels of distillate products, such as heating oil and diesel fuel, increased 500,000 barrels to 133.6 million over the week, in line with most forecasts.
Oil prices had slumped about two dollars over Tuesday and Wednesday, to one-month lows of 60.25 dollars in New York and 60.39 dollars in London.
The drop was because of mild weather in the United States.
On Tuesday, the US National Weather Service said that demand for US heating fuel this week would be 23 percent below normal.
"We keep on waiting for the cold snap to happen," said Steve Rowles, an analyst with CFC Seymour in Hong Kong.
"Maybe it's not going to happen and that's really going to affect overall demand," he added.
Sucden analyst Michael Davies said that the US weather situation was "helping to counter fears about the repercussions of UN sanctions on Iran" -- the world's fourth-largest exporter of oil.
"Some (in the market) are worried that the country could use oil as a bargaining chip if pushed into a corner," he added.
The UN Security Council adopted a resolution on December 23 which imposes restrictions on Iran's nuclear industry and missile program.
Iran has refused to heed the council's demand to suspend uranium enrichment, a process that Western countries fear could be used to develop a nuclear weapon. Iran insists its atomic drive is entirely peaceful.
AFP 28 2106 GMT 12 06
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