U.S. crude oil rose to nearly $ 92 a barrel on Wednesday, boosted by a fall in the dollar over two months lows, while Brent crude extended gains on concerns over a supply crunch.
The discount for U.S. crude futures benchmark West Texas Intermediate (WTI) v Brent remained strong at more than USD 6 per barrel, but below the $ 8 level reached before the February Brent contract expired last Friday.
But gains in U.S. crude could be limited by the impending start of Alaska’s major oil pipeline after a shutdown and a proposal from the International Energy Agency that OPEC may have raised output in response to high oil prices.
On the other hand, Brent prices were triggered by concerns over supply disruptions in the North Sea crude.
“We have no dramatic price movements are expected today – there is still a bit of holiday spirit in its raw, with trading volumes still relatively low, and the market is in a consolidation mode,” said Matthew Lewis, an analyst at CMC Markets in Sydney .
“For STI, at about U.S. $ 91, you probably see some rebound.”
U.S. crude oil for February delivery rose 48 cents to $ 91.86 a barrel by 0730 GMT, after settling 16 cents at USD 91.38 per barrel on Tuesday. The February contract expires on Thursday.
London Brent rose 20 cents to $ 98.00 a barrel, after gaining 37 cents to settle at USD 97.80 per barrel.
Traders will barns U.S. economic data due later in the day for more clues about the state of demand in the world’s top energy consumer.
The Commerce Department will release housing starts and permits for December 1330 GMT, which is expected to slightly positive. Economists forecast a 550,000 annual starts compared to a 555,000 rate in November. A total of 560,000 permits is expected in December compared with 544,000 in the previous month.
The release of weekly U.S. oil industry and government inventory data this week will be delayed one day after the national holiday Monday.
On the supply side, the main oil pipeline to restore Alaska’s shipments to the normal rate of 630,000 barrels per day in less than one week of around 510,000 bpd, following the recent shutdown due to a leak, the operator said on Tuesday.
The IEA said Tuesday that OPEC leader Saudi Arabia secretly had an output to cool oil prices rallied encouraged.
Her assessment was starkly at odds with anecdotal evidence of major recipients of Saudi Arabia, and the views of other analysts and consultants caught in a Reuters survey, which showed the kingdom output flat last month.
Royal Dutch Shell closing four North Sea Brent oil and gas platforms on Saturday and did not have a restart time.
The outlook for oil demand, on the other hand, remains robust. The IEA raised its 2011 world oil demand growth forecast by 80,000 barrels to 1.41 million bpd in its monthly report.
The dollar slipped to a two-month low against a basket of currencies on Wednesday, following short covering in the euro helped spur a broad decline in the dollar.
A weaker dollar can raise dollar-denominated oil prices because it lowers the value of the coin paid to producers and the price of oil to consumers using other currencies.
Asian shares rose on Wednesday, taking a cue from Wall Street profits and hope for more robust U.S. revenue.
source:moneycontrol
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