Singapore: Oil prices rose higher in Asia on Friday, 21 December, during rangebound trading as analysts looked ahead to a first-quarter fall in prices next year.
In morning trade, New York’s benchmark oil futures contract, light sweet crude for delivery in February, was 16 cents higher at $91.22 a barrel after closing down a slight 18 cents at $91.06 in New York on Thursday.
Brent North Sea crude for February delivery rose 12 cents to $91 a barrel after closing down 60 cents at $90.88 in London.
“I think for the remainder of the year the oil market is going to be rangebound,” said Victor Shum, of international energy consultants Purvin and Gertz in Singapore.
“The market, you could say, is in a stalemate,” he said, referring to divisions between two camps. One side is focussed on tight market fundamentals seen as supportive of pricing, while the other is more concerned with worries over the United States economy and fears that a recession would reduce oil demand.
Shum said the market will get near-term price support from a US Department of Energy report which showed a sharper than expected fall in US crude stockpiles for the week that ended 14 December.
Ongoing draws in stocks since November in members of the Organization for Economic Cooperation and Development (OECD) have supported prices, said Societe Generale (SG) researchers. OECD members include the US, Europe and Japan.
“In addition, Opec has clearly demonstrated its intention to maintain a tight grip on crude supplies amidst an uncertain outlook for economic and oil demand growth,” SG said in a report, referring to the Organization of the Petroleum Exporting Countries cartel.
US product demand has not grown since May and, despite draws in stocks, the market remains well supplied, SG said, forecasting supply and demand will be essentially balanced in the first quarter of 2008.
“As a result, the price support from stockdraws seen in recent weeks will dissipate and prices will fall,” with the benchmark New York contract seen averaging 85 dollars a barrel in the first quarter, it said.
SG said the weather will be “a key wildcard”, although overall winter temperatures are expected to be close to normal.
Some analysts have said a spike to $100 a barrel or higher during 2008 is a possibility.
From a low point of just below $50 a barrel in January, prices doubled in 2007, hitting $99.29 on 21 November, an all-time record.