Oil price steady on prospect of tighter market
Oil price steady on prospect of tighter market
Agence France-Presse, London
The price of oil held steady in early trading here on Thursday, buoyed by the prospect of stronger demand and possible supply disruptions in the event of a U.S. war in Iraq.
Reference Brent North Sea crude oil for January delivery traded at US$25.20 against $25.25 at the close of the previous session.
In New York, benchmark light sweet crude January-dated futures rallied 49 U.S. cents a barrel on Wednesday to $26.89.
"I think the rally over the last couple of weeks has run it's course and prices are holding fairly steady this morning," said Morgan Stanley analyst Irene Himona.
"Crude prices rose yesterday (Wednesday) on supportive US stock data and probably some short covering ahead of the Thanksgiving long weekend in the States," she added.
She said trade was likely to remain quiet for the rest of the week, with the New York market closed Thursday and Friday and London finishing early on both days.
Analysts said the fall in levels of U.S. stocks of crude oil and distillate fuel pointed to firmer demand as cold winter weather envelops the United States, the world's biggest oil consumer.
Recent signs of a recovery in the U.S. economy also bode well for demand, said GNI analyst Lawrence Eagles.
"Strong U.S. economic growth would provide a fillip to a global expansion, with important ramifications for oil demand and prices," he said.
The price of Brent has climbed in the last two weeks from nine-month lows in mid-November, helped also by increased concern that Iraq might fail to fully comply with stringent UN weapons inspections.
Himona said those worries, while still present, had partly eased after the first inspections were executed with the apparent cooperation of Iraq on Wednesday.
The market is concerned that a war in Iraq would lead to stoppages to Middle East oil supplies.
In any case, energy chiefs of the Organization of Petroleum Exporting Countries (OPEC), which includes many Middle East producers, are expected to agree to rein in output in line with official quotas when they meet in Vienna on Dec. 12.
Supply concerns are also coming from Venezuela ahead of a general strike due to start Dec. 2, though Himona said it was not clear to what extent the walkout would affect the oil industry.