Oil below US$60 as demand dampens

SINGAPORE – Oil prices held below US$60 (N$402) yesterday as mild temperatures in the US Northeast and Japan limited demand for heating fuel.

US crude edged six cents lower to US$59,70 a barrel after hitting a three-month low on Monday and ending US$1,46 down. London Brent crude was 10 cents lower at US$58 a barrel.Demand for heating oil in the United States is expected to be about 30 per cent below normal this week as temperatures in the US Northeast warm up after an early chill, according to the US National Weather Service.A slow start to winter in the US Northeast – the world’s biggest heating oil market – would compound worries that historically high energy costs were cutting into demand.”There’s no demand for cooling, and heating demand is not there yet – heating oil and natural gas prices are extremely high and people are doing their best to take it easy at the beginning of the winter season,” said John Brady at ABN AMRO in New York.The most recent figures from the US Energy Information Administration show fuel demand in the world’s largest energy consumer lagging more than two per cent below a year ago.Further direction on fuel inventories and demand will come from US government stock data today, forecast by analysts in a Reuters poll to show a build of 2,2 million barrels per day (bpd) in crude stocks last week but a 0,8 million barrel fall in distillates, including heating oil.In Japan, the world’s third-largest oil consumer where kerosene buying can soar for winter heating, the country’s fourth biggest refiner Cosmo Oil revised down its planned November production due to weaker kerosene and industrial demand.Japanese kerosene stocks are at a two-year high.Analysts still worry that a freezing winter in the northern hemisphere would come at a difficult time for the US oil industry, with Gulf of Mexico refiners and producers struggling to restore operations after being battered by hurricanes.Lost heating oil and gas output have led to concerns that Americans could run short of heating fuels in a winter cold snap.”We believe demand could be very strong for oil products as we head into winter, because of high natural gas prices,” said Deutsche Bank in an energy report.Repairing all the damaged rigs, platforms and pipelines in the Gulf of Mexico damaged by hurricanes Katrina and Rita will take up to a year and crude oil output will not return to normal until the end of March, US Interior Secretary Gale Norton said last week.-Nampa-ReutersLondon Brent crude was 10 cents lower at US$58 a barrel.Demand for heating oil in the United States is expected to be about 30 per cent below normal this week as temperatures in the US Northeast warm up after an early chill, according to the US National Weather Service.A slow start to winter in the US Northeast – the world’s biggest heating oil market – would compound worries that historically high energy costs were cutting into demand.”There’s no demand for cooling, and heating demand is not there yet – heating oil and natural gas prices are extremely high and people are doing their best to take it easy at the beginning of the winter season,” said John Brady at ABN AMRO in New York.The most recent figures from the US Energy Information Administration show fuel demand in the world’s largest energy consumer lagging more than two per cent below a year ago.Further direction on fuel inventories and demand will come from US government stock data today, forecast by analysts in a Reuters poll to show a build of 2,2 million barrels per day (bpd) in crude stocks last week but a 0,8 million barrel fall in distillates, including heating oil.In Japan, the world’s third-largest oil consumer where kerosene buying can soar for winter heating, the country’s fourth biggest refiner Cosmo Oil revised down its planned November production due to weaker kerosene and industrial demand.Japanese kerosene stocks are at a two-year high.Analysts still worry that a freezing winter in the northern hemisphere would come at a difficult time for the US oil industry, with Gulf of Mexico refiners and producers struggling to restore operations after being battered by hurricanes.Lost heating oil and gas output have led to concerns that Americans could run short of heating fuels in a winter cold snap.”We believe demand could be very strong for oil products as we head into winter, because of high natural gas prices,” said Deutsche Bank in an energy report.Repairing all the damaged rigs, platforms and pipelines in the Gulf of Mexico damaged by hurricanes Katrina and Rita will take up to a year and crude oil output will not return to normal until the end of March, US Interior Secretary Gale Norton said last week.-Nampa-Reuters