Oil Edges Up to $42 Ahead of U.S. Data (41.74/bbl)

Reuters ^ | December 29, 2004

[RWR8189]

LONDON (Reuters) - Oil prices edged higher for the second day on Wednesday ahead of U.S. government data expected to show a slight decline in winter heating fuel stocks. Lower-than-usual temperatures probably caused distillate fuel stockpiles to fall last week, a Reuters survey found, and they would still be in a double-digit deficit versus last year.

U.S. light crude oil futures were up 15 cents at $41.92 a barrel by 5:28 a.m. EST, building on Tuesday's 45 cent rise.

London's Brent crude fell by $1.47 a barrel to $38.60, catching with heavy U.S. losses earlier this week when the London market was closed.

Brokers said activity was set to be light and potentially volatile this week with many traders away for holidays and big-money funds likely to have closed their books for the year.

Prices touched a two-week low of $41 on Tuesday, falling more than $5 in a week as mild weather forecasts and higher U.S. inventories of distillate fuel -- including heating oil and diesel fuel -- eased winter supply fears.

Weekly U.S. government data due at 10:30 a.m. EST is expected to show a drop of 700,000 barrels in distillate supplies in the week to Dec. 24, a Reuters poll of 11 analyst showed, as the first blast of cold weather hit the U.S. Northeast.

"Demand for heating oil was very strong last week due to cold temperatures," said Phil Flynn, analyst at Alaron Trading in Chicago.

The analysts also expected crude oil stocks rose by a modest 50,000 barrels, while gasoline increased by 500,000 barrels.

Cold conditions prevailed up to Christmas but gave way to warmer weather later, with U.S. home heating needs estimated to be nearly 18 percent below normal for this week to Jan. 1, the U.S. National Weather Service forecast on Monday.

Milder conditions through the first half of winter have limited heating oil demand, but stocks have stayed low due to strong growth in diesel usage, data have shown.

Forecasts for an unusually chilly first quarter may keep the market above $40 for some time, together with crude production outages that have taken some 500,000 barrels per day (bpd) off the market for more than two weeks, analysts say.

Iraq's oil exports from its southern Gulf ports have resumed after bad weather stopped loadings for a day. The country's northern exports remained at a standstill following pipeline sabotage 11 days ago.

A Nigerian community leader said on Monday that a protest shutting in 120,000 bpd of output could be resolved this week.

In Asia, the death toll after Sunday's huge earthquake and tsunami climbed to nearly 70,000, but oil production, shipping and refining operations were unaffected.

[RWR8189]

12/29/04 Session Contract Detail for February 2005

	Last				41.74
	Open High				0.00
	Open Low				0.00
	High				42.15
	Low				41.67
	Settle				41.77
	Change				-0.03
	Open Interest				113631
	Volume				0
	Last Updated				12/29/04 06:20:34

[EQAndyBuzz]

Oil prices up = no good
Oil prices down = no good

Ok, I am confused. Maybe just fix the price of oil at 20 dollars bbl and leave it at that.