  |
|
Oil prices breach 55 dollars on weather concerns
AFP
NEW YORK
Petroleumworld.com 01 29 06World oil prices rose strongly on Friday, as traders predicted an expected rise in demand for heating fuels in the United States amid a recent cold snap.
New York's main oil futures contract, light sweet crude for delivery in March, leapt 1.19 dollars to close at 55.42 dollars per barrel.
In London, the price of Brent North Sea crude for March delivery jumped 1.17 dollars to settle at 55.29 dollars per barrel.
"The key development this week has been the growing evidence that market sentiment is turning more positive," said Barclays Capital analyst Kevin Norrish.
"Colder weather conditions and the decision to double the size of the US Strategic Petroleum Reserve were the two key factors in moving sentiment."
Prices also found support from robust oil demand growth, OPEC production cuts and simmering global geopolitical tensions, he added.
Crude futures had skidded beneath 55 dollars on Thursday as traders concentrated on news that US energy reserves had risen across the board last week.
Healthy US energy stocks put a lid on prices, following an increase due to the cold snap and US President George W. Bush's announcement on Tuesday that the United States would double its strategic oil reserve.
The US National Weather Service, meanwhile, forecast below normal temperatures continuing in the country's northeastern region -- the world's largest heating fuel market -- for roughly the next two weeks.
American stockpiles of distillate products, such as heating oil and diesel fuel, increased 700,000 barrels to 142.6 million in the week ended January 19, the US Department of Energy (DoE) had said on Wednesday. That confounded market expectations for a drop of 250,000 barrels.
Although US energy inventories remain ample, many analysts expect increased demand for heating oil, amid recent freezing weather, will hurt stockpile levels.
"It is worth noting that the effect of the recent cold snap may not be seen until the figures for this week, released next week," said Sucden analyst Michael Davies.
Mike Fitzpatrick at Fimat USA said he expects choppy market action but no major surge in prices.
"With weather forecasts constantly shifting back and forth, price action should be expected to remain volatile with a downward bias," he said.
"Add to the mix freshly escalating violence in Lebanon. Incremental evidence suggests that energy demand in the US and China will remain robust this year, which the markets may have underestimated.
"Also the filling and expansion of the US SPR is another added demand factor that could provide support. All of these several offsetting factors should keep prices bouncing between 50 and 55 dollars for the next week to 10 days," he said.
|Meanwhile, traders remained uncertain over whether OPEC cartel members would comply fully with their pledges to cut output.
Crude 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.
burs/rl/jjc
AFP 262045 GMT 01 07
Copyright© 1999 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