Oil price around US$56

SINGAPORE – Oil prices fell to US$56 (N$364) a barrel early yesterday, extending this week’s slump amid unseasonably warm temperatures in the US Northeast that have curbed demand and given refiners time to top up inventories.

US January crude oil futures were trading down 39 cents at US$56,11 a barrel by 0330 GMT, taking this week’s losses to US$2,60 or 4,4 per cent. London Brent crude shed 34 cents to US$53,98 a barrel.Activity was muted ahead of weekly US inventory data due later in the day.Prices have tumbled nearly US$15 in the past three months as bullish fears of a winter fuel supply crunch dissipate amid easing demand growth and robust stockpiles in the United States, Europe and Japan, particularly of home heating fuels.Assurances that core OPEC members see no need to cut back production at the cartel’s December 12 meeting, despite slumping prices and swelling storage tanks, added to the bearish pressure.”OPEC has made sure there’s no shortage of crude oil and the world refining system has responded to the (profit margin) incentives that the hurricanes have provided, plus demand is a bit lower year-on-year,” said Michael Coleman, managing director at Singapore-based commodity fund manager Aisling Analytics.”Put that together and you have a world awash in middle distillates.”The distillate pool includes heating oil, stocks of which now stand nine per cent higher than a year ago in the United States thanks to mild temperatures that have put a damper on demand in the US Northeast, which consumes 80 per cent of the fuel.US weekly inventories of total distillates are likely to have risen by 800 000 barrels last week, a Reuters survey of analysts showed.The data are due at 1530 GMT.Gasoline tanks, which are still in a deficit compared to last year, were expected to have risen 1,5 million barrels while crude oil inventories – already well above their seasonal norm – were forecast to have inched down 100 000 barrels last week.Stockpiles may continue rising if forecasts for much warmer than usual weather hold true throughout this week.Private forecast Meteorlogix said balmy weather will only turn colder than the seasonal average at the end of the week.”Every warm day is a day lost for the bulls,” said Coleman.”We would need a really severe, prolonged cold spell – say six to eight weeks – to begin to make a big dent in inventories.”Helping keep prices under pressure, core members of the Organisation of the Petroleum Exporting Countries (OPEC) signalled their desire to build up stockpiles ahead of the seasonal peak in global demand during the first quarter.- Nampa-ReutersLondon Brent crude shed 34 cents to US$53,98 a barrel.Activity was muted ahead of weekly US inventory data due later in the day.Prices have tumbled nearly US$15 in the past three months as bullish fears of a winter fuel supply crunch dissipate amid easing demand growth and robust stockpiles in the United States, Europe and Japan, particularly of home heating fuels.Assurances that core OPEC members see no need to cut back production at the cartel’s December 12 meeting, despite slumping prices and swelling storage tanks, added to the bearish pressure.”OPEC has made sure there’s no shortage of crude oil and the world refining system has responded to the (profit margin) incentives that the hurricanes have provided, plus demand is a bit lower year-on-year,” said Michael Coleman, managing director at Singapore-based commodity fund manager Aisling Analytics.”Put that together and you have a world awash in middle distillates.”The distillate pool includes heating oil, stocks of which now stand nine per cent higher than a year ago in the United States thanks to mild temperatures that have put a damper on demand in the US Northeast, which consumes 80 per cent of the fuel.US weekly inventories of total distillates are likely to have risen by 800 000 barrels last week, a Reuters survey of analysts showed.The data are due at 1530 GMT.Gasoline tanks, which are still in a deficit compared to last year, were expected to have risen 1,5 million barrels while crude oil inventories – already well above their seasonal norm – were forecast to have inched down 100 000 barrels last week.Stockpiles may continue rising if forecasts for much warmer than usual weather hold true throughout this week.Private forecast Meteorlogix said balmy weather will only turn colder than the seasonal average at the end of the week.”Every warm day is a day lost for the bulls,” said Coleman.”We would need a really severe, prolonged cold spell – say six to eight weeks – to begin to make a big dent in inventories.”Helping keep prices under pressure, core members of the Organisation of the Petroleum Exporting Countries (OPEC) signalled their desire to build up stockpiles ahead of the seasonal peak in global demand during the first quarter.- Nampa-Reuters