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Oil prices tumble to 19-month lows
AFP
NEW YORK
Petroleumworld.com 01 11 07World oil prices fell to 19-month lows Wednesday as a report showing ample heating oil supplies in the United States prompted an extension of the market selloff.
New York's main oil futures contract, light sweet crude for delivery in February closed down a hefty 1.62 dollars at 54.02 dollars per barrel, its lowest close since June 10, 2005. At one point the price fell as low as 53.63 dollars.
In London, Brent North Sea crude for February delivery settled 1.49 dollars lower at 53.69 dollars a barrel. Brent had dived to a 19-month low of 53.50 dollars a barrel in earlier trading.
Crude futures have tumbled by as much as 12 percent since the start of 2007 due to a large drop in demand for heating fuel, particularly in the United States amid mild winter temperatures.
"Markets may retain a negative bias for today as residual warm weather out into the coming weekend and the weekly oil inventory figures might keep sellers in a dominant position," said Mike Fitzpatrick, an oil analyst with Fimat USA.
The US Department of Energy (DoE) said Wednesday that stockpiles of distillates and gasoline rose last week, offsetting a bigger-than-expected drop in crude oil inventories.
The DoE said crude oil reserves dropped five million barrels to 314.7 million in the week ended January 5. Most oil traders were expecting crude inventories to have dropped by just 1.5 million barrels.
Inventories of distillate products, such as heating oil and diesel fuel, increased 5.4 million barrels to 141 million over the week, much more than the predicted rise of 2.0 million barrels.
Some analysts say that current US demand for heating fuel is 24 percent below the seasonal norm.
And despite weak oil prices, a London-based spokesman for the Organization of the Petroleum Exporting Countries (OPEC) said that an emergency meeting of the oil producers' cartel was not on the cards.
Elsewhere, the market was keeping a close eye on the oil transit dispute between Russia and Belarus.
The dispute has lead to a disruption of around 1.4 million barrels of oil per day from Russia to five European states and has renewed concerns about Russia's reliability as an energy supplier.
Hopes for resolving the dispute rose, however, after Minsk on Wednesday cancelled an exceptional tariff on crude shipments through the Druzhba (Friendship) pipeline to western Europe.
Russia's ambassador to the European Union, Vladimir Chizhov, said it was only "a question of a few hours" before oil shipments would began flowing again through the key supply route.
AFP 10 2051 GMT 01 07
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