Singapore: US crude futures edged down just below $80 a barrel on Thursday, trading in the middle of recent ranges and taking cues from the dollar and weather in the United States.
The greenback was steady against a basket of currencies, while unseasonably warm weather in the northeastern United States implied soft demand for heating oil.
“The dollar is flat and there is nothing else that really stands out as a major influence. Temperatures are unseasonably mild in the United States and crude is holding the range between the high $70s and low $80s,” said Peter McGuire, managing director of CWA Global Markets.
“Opec said they wanted $80 and they are getting it. I can’t see a surge in demand unless things turn much colder in the United States.”
The Organization of the Petroleum Exporting Countries should hold its oil output steady when it meets in December as current prices do not suggest the need to change supply, the head of Libya’s National Oil Corporation said on Wednesday.
NYMEX crude for December delivery fell 21 cents to $79.42 a barrel by 8:40am, after settling up 44 cents on Wednesday, when a drop in US oil and fuel inventories was overshadowed by wider economic concerns.
Implied oil volalities are at their lowest since February 2008, back near levels before last year’s surge to a record high.
“In the last five or six months the market has found a range and that range is closing in on itself,” said Jonathan Kornafel, director, Asia at Hudson Capital.
He noted trading bands had narrowed from $10 between $65 and $75 to a $4-range between $76 to $80, capped by technical resistance at $80 and $82 as well as worries about fundamental demand, while ultra-accomodating monetary policy would encourage investors to buy on dips.
Commercial crude oil stocks in the United States fell 900,000 barrels last week, the Energy Information Administration (EIA) said on Wednesday, more than analyst projections for a 300,000 barrel draw.
But the fall was much smaller than the 4.4 million-barrel drop reported earlier this week by the industry group American Petroleum Institute.
Also in the EIA report, gasoline stocks were down 1.7 million barrels against a forecast for no change, while distillate stocks also fell, by 300,000 barrels versus expectations for a 700,000-barrel drop.