Oil slips below $46 in Asian trade

Oil slips below $46 in Asian trade

Agence France-Presse, Singapore

Crude oil prices slipped below 46 dollars a barrel in Asian trade Wednesday on increasing hopes of adequate heating fuel supply during the northern hemisphere winter, dealers said.

At 03:35 pm (02:35 p.m Jakarta time), light sweet crude for delivery in December was at US$45.80 a barrel, down 31 cents from its close of $46.11 in New York on Tuesday.

Current prices are 41 percent higher than the level of $32 a barrel at the start of the year, but around 17 percent lower than the historic peaks of more than $55 a barrel reached in October.

"I think it's just the market perception that there's enough stocks of both crude oil and products in the world market," said Gerard Rigby, deputy head of trading at China Aviation Oil in Singapore, explaining the most recent falls.

"For the moment, a lot of traders are selling to exit their positions at the end of the year."

Daniel Hynes, an energy analyst with ANZ Bank in Melbourne, said the market was in the middle of a "strong downward trend" and further declines were expected ahead of a planned meeting of the OPEC oil cartel in December.

"There is talk now that there is pressure being applied for a production decrease from OPEC, which suggests that the market has completely turned around from only a few weeks ago," he said.

"Sentiment has changed drastically."

Hynes said current price levels were now coming in line with market fundamentals.

"Prices just pushed too fast to a higher level and once the speculators and funds left the market, the support for the price at that level was removed and we're now left without any buying support," he said.

He added that $45 will be the next "critical" support level.

Rigby of China Aviation Oil said, however, he remained worried about stockpile levels in distillates, mainly diesel and heating fuel, despite rising crude oil stocks due to expected higher demand during the northern hemisphere winter.

"I don't think there's any tightness in crude oil but distillates are low in Europe and the United States," Rigby said, adding that prices were likely to spike once more if the winter was harsher than expected.

Rigby said the technical support level for oil was currently at $45 a barrel.

"I'd be surprised if it goes below $45 unless there's a big build in distillate stocks in the next few weeks," he said.

The US Energy Department is due to release oil inventories late Wednesday.

Hynes agreed there were lingering concerns over winter heating oil supply.

"But the heat really has come out of the market and the perception now is that supplies are plentiful enough to meet demands from the market."