Oil prices weaken further

Oil prices weaken further

Oil prices fell slightly todayafter suffering the biggest one-day fall for more than a year yesterday.

New York’s main contract, light sweet crude for delivery in December, fell 11 cents to 58.25 dollars per barrel in electronic deals before the official opening of the US market Tuesday.

In London, Brent North Sea crude for December delivery dipped nine cents to 58.59 dollars per barrel in electronic trading.

Crude futures had closed with a fall of almost two and a half dollars on Monday, dampened by slowdowns in US economic growth and Chinese demand for energy, analysts had said.

Oil prices “remained under pressure” ahead of Wednesday’s publication of US energy stockpiles data, Sucden analyst Michael Davies said.

Market followers expect the US
Department of Energy to reveal that crude stockpiles jumped strongly last week.

Oil prices were being weighed down also by expectations of warmer temperatures in the United States, which could lead to a drop in demand for heating fuel.

“The impact of warm weather is psychological on the market,” Global Insight analyst Simon Wardell said.

“It tends to refocus attention on heating oil stocks, which are really quite high for this time of the year.”

Victor Shum, an analyst with energy consultancy Purvin and Gertz in Singapore, said prices remained below 60 dollars per barrel after fears of an attack against Saudi Arabian oil facilities dissipated.

“Prices went up late last week because of the rumoured threat of attacks on the Saudi oil ports. Those fears have eased and so we see prices receding,” he said.

Saudi Arabia pumps more than nine million barrels of oil per day and sits on a quarter of global crude oil reserves. It operates the world’s largest oil terminal at Ras Tannura in the Gulf.

The Saudi interior ministry said Friday that installations in the country were a “high-probability potential target” for terrorist attack, sending prices up.

But the ministry also said tight security measures were in place to protect the facilities and a spokesman for Western naval forces in the Gulf said coalition troops were taking measures against any threats.

Shum said on Tuesday that prices were likely to trade within a 58-62 dollar range in the near-term.

“In the near-term, what will drive the oil market is what the weather is going to be like during the northern hemisphere (winter) and impacted by the broader global economic outlook,” he said.

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