Singapore: Oil traded slightly higher in Asia on Wednesday in a market delicately balanced between supply and demand against a backdrop of concern for the US economy, dealers said.
New York’s main oil futures contract, light sweet crude for January delivery, was 33 cents higher at $90.41 a barrel while Brent North Sea crude for February delivery was 45 cents higher at $90.57 a barrel.
Prices in New York surged briefly on Tuesday but then eased as Turkish troops moved into oil-producing northern Iraq and then withdrew.
Turkey’s military said it dealt a “heavy blow” to Kurdish separatist rebels in the cross-border ground operation on Tuesday, and in weekend air raids.
“It seems to have been a very limited ground incursion,” said Jason Feer, vice president and Asia Pacific general manager for energy market analysts Argus Media Ltd in Singapore.
He said the action was no surprise.
“The expansion of geopolitical risk will be balanced by lingering concerns about the economy,” Mike Fitzpatrick at MF Global said during US trading hours.
Feer agreed that worry over the United States economy is “a pretty significant factor” for the market, which fears a potential slowdown could dampen oil demand.
“I think the market’s still relatively delicately balanced” in terms of fundamentals, Feer said.
Both the International Energy Agency, the energy policy adviser to major industrialised countries, and Opec recently raised their estimates for global oil demand next year.
Oil prices surged to a record high of $99.29 a barrel on 21 November, which led to widespread calls for Opec to hike output at its meeting in Abu Dhabi earlier this month.
However, the Organization of the Petroleum Exporting Countries decided against increasing production, as it insisted that the market was well supplied.
Feer said the market was also “betting on the weather” as the North American winter hit relatively early. Last weekend a major snowstorm struck the northeastern region of the US, the world’s biggest heating oil market.
“There’s definitely a chance of stocks getting depleted,” Feer said.