Oil rises as U.S. faces winter without OPEC boost
Oil rises as U.S. faces winter without OPEC boost
SINGAPORE (Reuters): Oil prices climbed in Asia on Tuesday as
OPEC held production steady and the world's top consumer, the
United States, faced the prospect of colder weather with thin
stocks.
New York Mercantile Exchange crude futures last traded at
$34.65 per barrel at 0400 GMT, gaining another 18 cents after
ending 45 cents up in New York trading.
OPEC ministers meeting in Vienna on Monday ratified a widely
expected agreement to keep output quotas unchanged rather than
increase them for the fifth time this year.
Ministers expect oil prices will soon fall within their $22-
$28 target range for OPEC's basket of crudes as the full impact
of the group's output rise this year of 3.7 million barrels per
day hits the market.
"We can only conclude that OPEC has more than fulfilled its
role as a reliable oil supplier and that the true reasons for the
currently high prices lie behind a series of other factors," said
OPEC President Ali Rodriguez of Venezuela.
Rodriguez told reporters that no more crude would come from
the group this year.
OPEC meets again on January 17, by which time, oil market
analysts expect a year-on-year deficit in inventories to have
turned into a surplus.
"In this fourth and also the first quarter, the level of crude
oil supplies will exceed the level of demand, leading
directionally to a stockbuild, in contrast to what would normally
be a stockdraw this time of the year," said John Russel, managing
director of Bangkok-based Petroleum Economics Limited (PEL)
Pacific.
"The year-on-year stock deficit is expected to disappear as we
move through the mid-winter period." he said.
But the immediate focus will be on low U.S. heating oil stocks
which will provide a thin buffer for the country in the event of
a sharp cold snap.
"While stocks remain tight, it would be very difficult for
prices to move significantly lower," Russel said.
Temperatures in the U.S. Northeast are expected to drop below
normal this week and in the run-up to the Thanksgiving holiday on
November 23, according to Weather Services Corp.
The North American region, where heating oil stocks are more
than 40 percent below last year's levels, has so far this year
experienced mainly above normal temperatures.