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Oil prices hover above $41 a barrel
Oil prices hovered above $41 a barrel on Tuesday, pausing after a fall of more than 10 percent in the last five sessions amid rising U.S. stockpiles and warmer-than-expected weather. U.S. light crude oil futures were up 16 cents at $41.48 a barrel by 11:06 p.m. EST Monday, taking a breather after Monday's steep 6 percent slump in holiday-thinned trade.
London's International Petroleum Exchange (IPE) was shut for a bank holiday on Tuesday.
Prices have fallen nearly $5 a barrel in as many days as an increase in U.S. distillate inventories and revised weather forecasts calling for above-average temperatures helped calm lingering anxiety about a potential winter fuel supply crunch.
U.S. domestic heating needs will be nearly 18 percent below normal in the coming week, with the heavy consuming New England area 7.7 percent below average, the U.S. National Weather Service forecast on Monday.
The more bearish short-term outlook for oil demand may have also encouraged speculators to take accumulating profits out of the market, which is up 27.5 percent since the start of the year.
"Speculators do not like to have positions at the end of the year," said Tetsu Emori, chief commodities strategist at Mitsui Bussan Futures in Tokyo.
Big-money funds had moved back to the long side of the crude market as of last Tuesday, holding a very small net position of 1,638 lots, according to U.S. data, but they are likely to have gone short amid the steep sell-off since then, dealers said.
Traders will now look to Wednesday's weekly U.S. stockpile report for indications of whether still-low heating oil supplies will be sufficient to last the winter.
Distillate stocks, which include heating oil and diesel, are forecast to have dipped 720,000 barrels in the week to Dec. 24 as cold weather spurred demand in the Northeast, according to a preliminary Reuters poll of eight analysts.
Analysts had also expected inventories to fall in the previous week, but they rose 700,000 barrels instead.
Crude tanks were seen sliding 200,000 barrels and gasoline stocks rising 240,000 barrels last week, the poll showed.
Unless winter fuel supplies make up some of their nearly 12 percent deficit versus last year, the market is likely to remain on edge well into the first quarter, which forecasters expected to be colder than usual.
Global crude production outages are also still sapping some 500,000 barrels per day (bpd), although a Nigerian community leader said on Monday that a protest shutting in 120,000 bpd of output could be resolved this week.
In Asia, the death toll after Sunday's huge earthquake and tsunami climbed to more than 23,000, but oil production, shipping and refining operations were unaffected. |
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