Oil stays high, defying U.S. crude stock increase
Oil stays high, defying U.S. crude stock increase
LONDON (Reuters): Blazing oil prices showed no signs of
retreating on Wednesday, trading steady despite reports of a big
increase in U.S. crude stocks as fears of heating oil shortages
this winter in the West mounted.
International benchmark Brent crude futures for October
delivery were trading eight cents down at $31.28 while U.S. light
crude futures were 12 cents down at $32.62.
Prices have refused to leave the $30 danger zone, spreading
anxiety in consuming nations and stepping up pressure on the
Organization of the Petroleum Exporting Countries to boost
production at its September 10 ministerial meeting in Vienna.
OPEC, locked in a fierce battle with soaring prices despite
previous supply increases, is expected to turn up the taps by an
extra 500,000 barrels per day (BPD) at that conference.
But jittery traders worry that will not be enough to meet an
expected jump in heating oil demand this winter.
"The market is starting to anticipate an increase in supply
from the cartel of 500,000 bpd. We believe that this will at best
balance the market over Q4 (the fourth quarter) and allow prices
to remain strong," said Williams de Broe in its daily oil
comment.
The resilience of high oil prices was underscored after the
market digested the latest data on Tuesday from the American
Petroleum Institute, a pivotal weekly U.S. stocks report.
It indicated that crude supplies recovered somewhat from their
recent 24-year lows with a 5.26 million barrel rise after
analysts were expecting a 2.3 million barrel increase in crude
stocks.
The API report deepened fears over a possible heating oil
shortage this winter, as supplies are still almost 30 million
barrels below last year's level.
The API said U.S. distillate stocks, which include heating
oil, climbed only modestly by one million barrels last week.
Traders will closely watch weekly data from the U.S.
Department of Energy's Energy Information Administration due for
release on Wednesday for hard clues on market direction.
The spotlight is now on OPEC as it prepares for the September
10 output policy meeting. Cartel statements this week have not
been reassuring to those who want to see extra barrels hit the
market soon.
OPEC President Ali Rodriguez of Venezuela blamed high taxation
among consumer nations and refinery bottlenecks for soaring
prices. He added that OPEC crude supply was adequate and that the
cartel could not be held responsible for current oil price
movements.
Iran, OPEC's second largest producer, took a similar view,
with its OPEC Governor Hossein Kazempour Ardebili speaking of
sound market fundamentals.