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Crude prices retreat amid rising US reserves
AFP
NEW YOR
Petroleumworld.com 01 26 06Global oil prices skidded lower Thursday despite colder US winter weather as the market focused on rising energy reserves in the United States, analysts said.
New York's main oil futures contract, light sweet crude for delivery in March, slumped 1.14 dollars to close at 54.23 dollars a barrel.
In London, the price of Brent North Sea crude for March delivery slid 1.31 dollars to settle at 54.12 dollars a barrel.
The advent of fresh snowfalls in parts of the US northeast Thursday did nothing to depress prices. As colder temperatures gripped Europe and the United States, oil prices had risen this week beyond 55 dollars per barrel.
But Phil Flynn at Alaron Trading said: "Some weather forecasters are backing off some of the cold weather forecasts. And a UK tracking firm basically said that OPEC production went up last month."
Oil prices have slumped since striking highs above 78 dollars a barrel last summer, prompting the Organization of the Petroleum Exporting Countries to twice announce cuts to its combined production in recent months.
"The market now is doubting that it's going to get that cold and the market is doubting that OPEC is going to follow through on its production cut," Flynn said.
"I think that kind of took the momentum out of the market today."
Swelling US energy inventories had pressured prices on Wednesday, following sharp gains made on Tuesday in reaction to plans by President George W. Bush to double America's emergency oil reserves.
"The stocks influenced the market yesterday but the fact that strategic reserves will increase their storage is a more important issue for the market at the moment," Bache Financial trader Tony Machacek said.
In his annual State of the Union speech Tuesday, Bush also appealed for a 20-percent cut in US gasoline use by 2017, a move the White House said would slash vehicle emissions partly blamed for global warming.
The US Department of Energy (DoE) had said on Wednesday that stocks of distillate products, such as heating oil and diesel fuel, increased 700,000 barrels to 142.6 million in the week ended January 19.
That confounded analysts' consensus forecasts for a decline of 250,000 barrels.
Stockpiles are however expected to show a decline in next week's report after US temperatures fell in recent days.
"The market is basically balanced right now and is going to trade within a range of 50 and 55 dollars," Fimat analyst Mike Fitzpatrick said.
"So there is no reason to be short below 50 or long above 55," he said, referring to speculative trading positions.
AFP 25 2037 GMT 01 07
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