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."