Singapore: Oil was steady below $70 a barrel on Tuesday, after slumping for a ninth straight session the previous day to an 11-week low on persistent worries over hefty stockpiles and sluggish demand.
Traders will scour the US weekly oil inventory report from the American Petroleum Institute (API) to see if stockpiles continue to rise, and a slew of economic data, including November industrial output figures, for clues on the health of the world’s largest economy.
Oil prices fell more than $8 a barrel from 1-14 December in the longest price slide since July 2001, as rising inventories in the United States cast doubts over the pace of demand recovery in the world’s top energy consumer.
Stocks at Cushing, Oklahoma, the delivery point for NYMEX WTI crude futures, have swelled by 7.8 million barrels in the last six weeks to 33.4 million barrels, putting pressure on WTI for near-term delivery as concerns grew over an oil glut in the US Midwest.
The US Federal Reserve’s monetary policy decision, to be announced on Wednesday after a two-day meeting, will also be closely watched. Interest rates are expected to stay unchanged at near zero, but the tone of any comments made will be analyzed for clues as to when the Fed might start tightening policy.
Crude for January delivery rose 29 cents to $69.80 a barrel by 0230 GMT, after settling down 36 cents at $69.51 on Monday, the lowest settlement since Sept. 29. London Brent crude was up 9 cents at $71.98.
“We’ve seen an extremely modest rebound in oil so far, after nine straight sessions of losses, and the downside is still very much intact,” said Michelle Kwek, an analyst with Informa Global Markets in Singapore.
“Normally, demand perks up during the winter, but so far, demand has been abnormally weak, and this has been a major concern. We could see oil heading down towards $65,” she added.
The recent slide in U.S. crude prices could trigger further selling, as oil prices plummet through technical support levels, analysts said.
US heating demand this week may not provide much price support. The National Weather Service estimated that demand for heating oil - the favoured heating fuel of the Northeast United States - would be about 1.3% below normal this week.
On the supply side, US crude inventories were expected to have fallen by 2 million barrels last week, according to a preliminary Reuters poll of analysts.
Distillate stocks probably fell 700,000 barrels, while gasoline stocks were seen up by 1.1 million barrels.
The US Energy Information Administration (EIA) will release its own inventory figures on Wednesday.
The Organization of the Petroleum Exporting Countries is (OPEC) expected to hold production targets steady at its next meeting on 22 December. OPEC has been quietly putting more oil on the market since April, as prices rallied from below $33 a barrel last December.
On a brighter note, economic data due later could show that the US economy is on a slow and patchy road to recovery.
The Federal Reserve will unveil November industrial production and capacity utilization data at 1415 GMT. Economists forecast a 0.5% increase in output, up from a 0.1% rise in October, while capacity utilization is expected to rise to 71.1% from 70.7% in October.