Today.Az » Business » Oil prices slip further amid unexpectedly low demand
08 February 2007 [16:32] - Today.Az
Oil prices slipped further Thursday, continuing their downward trend after the U.S. Department of Energy's weekly inventory report showed lower than expected demand for distillate fuels like heating oil.
Still, traders suggested that the fall in prices could be short-lived, noting continued winter demand for heating oil and market concerns about geopolitical hotspots Nigeria and Iran — both OPEC oil producers.
"The drop of more than a dollar yesterday was an overreaction to the U.S. inventories report, which was not particularly bearish," said Victor Shum, an energy analyst with Purvin & Gertz in Singapore.
The daily volatility in trading "shows that the market is still solidly in the US$56-60 range," Shum said.
Vienna's PVM Oil Associates also suggested that the large-scale fall in prices on Wednesday could be due for correction, noting that — despite the relatively slight drop in heating oil stocks, "robust stocks levels seen at the end of 2006 (are) a distant memory."
Light, sweet crude for March delivery was down 13 cents to US$58.58 a barrel in electronic trading on the New York Mercantile Exchange by noon in Europe.
March Brent crude at London's ICE Futures exchange was up 3 cents to US$57.26 a barrel.
In other Nymex trading Thursday, heating oil was down less than a penny to US$1.6610 a gallon (3.8 liters), and natural gas prices were up nearly 3 cents to US$7.735 per 1,000 cubic feet.
Shum said continued oil worker kidnappings in Nigeria and increasing tensions between Iran and the United States over the Iranian nuclear program were "a reminder to the oil market that geopolitical tensions are lurking" but were not strong enough factors to leap above the psychological barrier of US$60.
Bitterly cold weather recently in the U.S. Northeast — which represents 80 percent of the nation's heating oil demand — has helped lift oil prices 19 percent since Jan. 18, when crude touched a 20-month low of US$49.90.
The National Oceanic and Atmospheric Administration continues to forecast below-normal temperatures across the Northeast until at least Feb. 19.
Traders have not sent prices above US$60 a barrel since the first trading day of the year. The Associated Press
/The International Herald Tribune/