Crude Oil Seen Higher as U.S. Supplies Drop More Than Expected
London, Dec. 1 (Bloomberg) -- Crude oil is expected to rise
after U.S. inventories fell more than expected, the latest sign
that supplies in the world's top energy-consuming nation are
declining as leading oil-exporting nations reduce output.
Crude oil for January settlement is expected to open 50
cents to 60 cents higher from $23.64 a barrel on the
International Petroleum Exchange, traders said. Crude oil for
January delivery on the New York Mercantile Exchange was up 56
cents at $25.15 a barrel in electronic trading.
U.S. crude oil inventories last week dropped by 1.2 percent,
more than analysts expected, to near their lowest level in two
years, the American Petroleum Institute said. The figures
overrode traders' expectations that Iraq, which pumps 3 percent
of the world's oil, will resume exporting oil within days,
speculation that caused oil to drop almost 5 percent yesterday.
The API report ``is giving the market a boost, but we're
also seeing a reaction to yesterday's sharp drop,' said Lawrence
Eagles, an analyst at brokerage GNI Ltd.
Even after yesterday's 4.9 percent drop -- its biggest
decline for two months -- oil prices are close to a nine-year
high, having more than doubled from December after the
Organization of Petroleum Exporting Countries and four other
nations cut output by some 7 percent for a year starting April 1.
The latest evidence of that supply restraint came after the
close of floor trading on Nymex yesterday, when the API reported
a third straight weekly decline in oil inventories. Crude
supplies dropped 3.6 million barrels, exceeding estimates from
all 10 analysts in a Bloomberg survey.
U.S. inventories now stand at 303.3 million barrels, just 1
percent above last month's low of 300.3 million barrels.
Iraq
A dispute between Iraq and the United Nations last week
sparked a rally in prices to their highest level since the 1991
Gulf War as traders bought oil in case the impasse lasted through
the peak winter demand period.
Still, in the last few days traders have speculated that the
UN could soon resolve a deadlock over its Iraq policy, allowing
OPEC's third-biggest producer to expand exports after nine years
of sanctions.
Iraqi Deputy Prime Minister Tariq Aziz is in Moscow today to
discuss a six-month renewal of its UN-controlled oil-for-food
program and the eventual lifting of sanctions. The visit could
mean that a compromise could be in the works to reconcile
U.S. insistence on weapons inspections with Iraq's demand that
sanctions be ended immediately.
Iraq's oil minister, Amer Mohammed Rasheed, said Monday that
Baghdad's suspension of exports would last two weeks, or until
Dec. 4. He didn't say what the country will do after that.
|
