Singapore: Oil prices rose slightly on 4 January from the previous session’s close after setting a record above $100 a barrel overnight on a larger-than-expected drop in U.S. crude stockpiles.
The U.S. Energy Department’s Energy Information Administration said on 3 January that crude inventories fell 4 million barrels last week, much more than the 1.7 million barrel decline analysts surveyed by Dow Jones Newswires, on average, had expected.
The large decline wasn’t able to keep oil prices above $100 “likely because the inventory drawdown was at least in part attributed to year-end inventory management by American oil companies,” said Victor Shum, an energy analyst with Purvin & Gertz in Singapore.
Light, sweet crude for February delivery added 9 cents to $99.27 a barrel in Asian electronic trading on the New York Mercantile Exchange by midday in Singapore. The contract on rose 47 cents overnight to $100.09 a barrel, a trading record, before retreating to settle at $99.18 a barrel, down 44 cents.
Crude’s move to $100 a barrel prompted Indonesian officials to announce plans to ask OPEC to boost output to bring down oil prices, Dow Jones reported. While that may be tempting to some Organization of Petroleum Exporting Countries members, many analysts think high prices will themselves do the trick by cutting demand.
“By the time OPEC meets on 1 Feb., crude oil prices will have softened because the peak winter season demand in the northern hemisphere will be over and typically in the second quarter, pricing is weak so there will be less pressure on OPEC to raise output,” Shum said.
The EIA also said in its weekly report that inventories of distillates, which include heating oil and diesel fuel, rose 600,000 barrels, countering analyst expectations that distillate supplies would fall 600,000 barrels. Supplies of gasoline rose 1.9 million barrels, more than the 1.3 million barrel increase analysts had expected.
Crude supplies at the closely watched Nymex delivery terminal in Cushing, Okla., were unchanged last week at 17.5 million barrels. Falling supplies there are seen as a symptom of a tight market, and those concerns ease when Cushing inventories rise.
Refinery activity rose by 1.3% last week to 89.4% of capacity. Analysts had expected refinery use to increase by 0.4% point. Prices have been volatile in recent days due to low holiday week trading volumes. That means some of the price moves, including Thursday’s record, may be exaggerated.
Heating oil futures added 0.04 cent to $2.7195 a gallon (3.8 liters) while gasoline prices rose 0.13 cent to $2.5427 a gallon. Natural gas futures gained 2.6 cents to $7.70 per 1,000 cubic feet. In London, Brent crude rose 27 cents to $97.87 a barrel on the ICE Futures exchange.