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Oil prices higher on expected US drawdown
AFP
SINGAPORE
Petroleumworld.com 09 26 07
Oil prices rebounded from overnight losses in Asian trade Wednesday on expectations of a drawdown in US crude reserves, dealers said.
At 2:15 pm (0615 GMT) New York's main contract, light sweet crude for November delivery, was 39 cents higher at 79.92 US dollars a barrel from 79.53 dollars in late US trades Tuesday where it had dropped 1.42 dollars.
Brent North Sea crude for November delivery gained 24 cents to 77.86 dollars.
The US Department of Energy (DoE) was due later Wednesday to release its weekly report on the country's energy stockpiles, and the market is expecting a decline of over 2.0 million barrels in crude oil reserves, dealers said.
Last week's report showed US crude inventories had plunged by 3.8 million barrels in the week ended September 14. That marked the 10th consecutive weekly drop and the decline was almost double market expectations.
Even if the DoE report does show a decline in crude reserves, the market is still "adequately supplied," said Helen Henton, head of commodities research at Standard Chartered.
"US inventories may be falling but they are falling from very high levels and are a consequence of improving refinery run rates," she said.
"Potential shut-ins in the Gulf of Mexico owing to hurricane activity remain a threat to supply, but the reality is that these tend to be short-lived."
Henton noted that US gasoline demand has been persistently strong, despite high prices, while China's import demand continues apace.
"We believe oil prices are now too high and not reflecting the fundamentals of the market," she said.
"Once the US hurricane season has passed and OPEC's production increase becomes a reality, we expect prices to move lower, settling in the 65-70 dollar range."
AFP 26 0629 GMT 09 07
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