kennyboysnakeoiltrader: Oil at $60 on Signs of Weaker Demand
By REUTERS
Filed at 0:43 a.m. ET
SINGAPORE (Reuters) - Oil prices held around $60 on Friday after a 2.2 percent slide the previous day as U.S. oil and natural gas stocks swelled, revealing weaker demand in the world's top consumer.
U.S. light crude oil futures for December delivery eased 1 cent to $60.01 a barrel by 0405 GMT, after sliding to nearly a three-month low of $59.65. November crude expired $1.38 lower on Thursday at $61.03.
London Brent crude traded 21 cents lower at $57.70.
The slide came after U.S. data on Thursday showed a big rise in natural gas stocks, adding to a huge build in crude and a shock rise in gasoline inventories reported on Wednesday.
``Sentiment in the natural gas market has turned decidedly bearish on the basis of demand destruction -- and it may take a westerly turn by Hurricane Wilma or frigid temperatures to turn the tide,'' said JP Morgan in an energy report.
The U.S. crude stock-build took supplies nearly 12 percent above a year earlier, after hurricanes Rita and Katrina closed Gulf Coast refineries and slashed demand for the feedstock.
The U.S. data also showed a decline in total oil product demand deepening to 3.2 percent over the past four weeks, a bigger drop than last week's 2.8 percent, although gasoline and distillate deliveries maintained similar year-on-year weakness.
Hurricane Wilma, which had spooked traders when it threatened to give western Gulf of Mexico oil facilities their third beating this year, was expected to track instead toward Florida.
The U.S. government said 64.5 percent of the region's 1.5 million barrels per day (bpd) of crude output capacity remained paralyzed on Thursday. Five U.S. refineries or 7.7 percent of the nation's fuel processing capacity remain completely shut, though one of these plants in Texas is gearing up for a restart.
Adding to bearish sentiment, the International Energy Agency (IEA) met in Paris on Thursday and said it agreed to allow any unplaced oil from its initial emergency reserves release to remain available for the market.
The IEA, adviser to 26 industrialized nations, co-ordinated a 30-day global release of up to 60 million barrels of crude and refined products such as gasoline to make up for shortages after Katrina slammed into U.S. Gulf rigs and refineries.
WINTER WORRIES
The West's energy watchdog said it would not authorize a further release of its member oil stocks but would be ready to order more supplies to meet any serious future shortages.
Some analysts said supplies of fuels such as heating oil, which fell last week but remained higher than this time in 2004, could still spell higher prices as the northern hemisphere approaches winter, when global fuel demand peaks.
``By first snow we expect extremely low stocks of heating oil and natural gas, with major pressure on refineries that need to (have maintenance),'' said Deutsche Bank. ``The fact is, some demand destruction is needed to balance this market.''
The UK Meteorological Office has predicted a colder-than-average winter for much of Europe, while forecaster EarthSat said this week that the U.S. Northeast -- the world's largest heating oil market -- would be chillier than last year.
Economic data showing major economies still powering ahead, despite high prices, have also checked oil's decline from its end-August record peak of $70.85 a barrel in New York.
But a top Bush administration official said on Thursday a prolonged stretch of record prices could harm economic growth.
Sabotage on Iraq's oil infrastructure remains a worry, with a bombing of a secondary oil pipeline in northern Iraq that feeds the route to Turkey cutting exports by 100,000 barrels per day (bpd) to 600,000 bpd, an Iraqi oil official said on Thursday. |
