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31.01.2007 Business & Finance

Oil Is Little Changed After Falling on Ample U.S. Fuel Supplies

By (ghanaian-chronicle)
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Crude oil was little changed in New York after falling yesterday on speculation U.S. fuel supplies are adequate to meet late-winter heating demand.

An Energy Department report tomorrow will probably show the nation's above-average oil stockpiles rose for a third week as refining processing stalled at a two-month low, according to a Bloomberg News survey of 11 analysts. Distillate supplies, which include heating oil, will remain above their five-year average after falling for the first week in seven, the survey said.

“Refinery runs are a little less because of maintenance,” said Tetsu Emori, chief commodities strategist at Mitsui Bussan Futures Ltd. “The level of the heating oil inventories remains high, so there is no problem at the moment.”

Crude oil for March delivery was at $54.15 a barrel, up 14 cents, in after-hours electronic trading on the New York Mercantile Exchange at 3:59 p.m. in Singapore.

The contract fell $1.41, or 2.5 percent, to $54.01 yesterday, the lowest close in a week. Oil futures have traded between $49.90 and $55.96 a barrel the past two weeks.

Heating demand in the U.S. Northeast, the country's biggest heating oil consuming region, will be 12 percent above normal in the week through Feb. 5, forecaster Weather Derivatives said.

A U.S. Energy Department report will probably show the nation's distillate supplies fell 2.1 million barrels last week, based on the median estimate from the analyst survey. Stockpiles held 142.6 million on Jan. 19, or 9.4 percent more than the five-year average for the period, according to the report.

Refineries operated at 87.4 percent in the week ended Jan. 19, the lowest level since November, the department said.

In London, Brent crude oil for March settlement was at $53.92 a barrel, up 24 cents, in electronic trading on the ICE Futures exchange at 3:59 p.m. Singapore time.

Ample Stockpiles
“It's been cold in the Northeast so we probably will see some drawdown in the distillate stocks,” said Mark Waggoner, president of Excel Futures Inc. in Huntington Beach, California. Stockpiles are ample “unless it stays nice and frosty for a long time but it's going to have to be a long, long time.”

World oil demand peaks in the fourth and first quarters when refiners make heating fuel for the Northern Hemisphere winter. Mild December temperatures in Europe and parts of the U.S., the world's biggest oil consumer, prompted the Organization of Petroleum Exporting Countries to agree to cut output by 500,000 barrels a day starting Feb. 1 to stem rising stockpiles.

Oil prices rose 6.6 percent last week after the U.S. announced plans to increase its strategic petroleum reserve and the expiry of the February contract shifted trading into the higher-priced March contract.

The U.S. Energy Department will publish its weekly inventory report at 10:30 a.m. in Washington tomorrow.

Gasoline stockpiles probably gained 1.8 million barrels, according to the survey, the seventh straight increase. Supplies surged 4 million barrels to 220.8 million last week, 2.9 percent above the five-year average.

U.S. crude oil supplies probably gained 1.5 million barrels. They held 322.2 million barrels on Jan. 19, 9.4 percent more than the five-year average. Bloomberg

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