Oil trades near $90 a barrel
Oil traded near $90 a barrel in New York on forecasts that US crude stockpiles are declining as colder weather approaches the nation.
Inventories probably dropped to the lowest since July 9, according to a Bloomberg survey before tomorrow’s Energy Department report.
Heating oil futures were near a two-day high after forecasts of colder-than-normal weather in parts of the Midwest, Southeast and mid-Atlantic through December 27. Crude rose on speculation China’s decision to keep its benchmark interest rate unchanged will buoy demand for commodities.
“Fundamentally the ongoing cold snap is supportive, though supplies are ample,” said Andrey Kryuchenkov, an analyst with VTB Capital in London. “In the short run, there is no reason to expect tightness. Trading ranges are still intact in New York and London, so the mood is moderately bullish.”
The January contract was at $88.86 a barrel, up 25 cents, in electronic trading on the New York Mercantile Exchange at 11:34am London time.
Prices have risen 12pc this year. Brent crude for January settlement was up 38 cents at $91.57 a barrel on the ICE Futures exchange in London.
Crude prices may rise above $100 a barrel by the second half of next year as US demand recovers and global inventories decline, Goldman Sachs said in its 2011 commodities outlook, dated yesterday.
The dollar traded near a one-week low against the yen amid speculation that the Federal Reserve will signal it’s open to increasing debt purchases beyond the $600bn already announced. The Fed’s policy makers are scheduled to meet today.
“Ultimately a weaker dollar is generally supportive of commodities because it makes it cheaper for places like China,” said Mark Keenan, chief investment officer at Cubit Asset Management Pte in Singapore. “With the government trying to rein in activity in China, maybe that effect will be a little muted this time.”
The US Energy Department is scheduled to release its weekly report on December 15 in Washington. The industry- funded American Petroleum Institute will publish its own estimates today.
Florida declared a state of emergency amid severe cold that could damage crops, and a snowstorm battered the Midwest. Supplies of distillate fuel, a category that includes heating oil and diesel, probably slipped 1 million barrels from 160.2 million, according to Bloomberg’s survey.
US crude stockpiles probably dropped to the lowest since July 9, according to the median of 11 analysts’ estimates before tomorrow’s report.
Oil inventories fell 2.6 million barrels in the seven days to December 10, the survey showed. US petroleum inventories probably increased for a fourth week.