Oil steady near $83 ahead of Bernanke speech

Oil steady near $83 ahead of Bernanke speech

Singapore: Oil was steady on Friday, heading for a third straight weekly close above $80, as hopes for economic stimulus ahead of a speech by Fed chief Ben Bernanke countered soft demand in top consumer the United States.

US crude for November rose 6 cents to $82.75 a barrel by 09:35 am, less than $2 from last week’s 5-month peak of $84.43, while December ICE Brent was unchanged 15 at $84.20. November Brent expired on Thursday.

Thursday’s drop in the dollar to 2010 lows kept commodities among investors’ top picks, briefly sending oil above $84, before government data showed US gasoline consumption fell 1.1% in the past four weeks from a year ago, while total oil demand rose just 0.8%.

“The near-term picture of the US oil market remains challenging," said Stefan Graber, a commodities analyst with Credit Suisse in Singapore.

“We expect the range-trading theme in the oil market to extend, with temporary setbacks below $80 still possible."

Oil prices broke out of this year’s predominant $70 to $80 range last month as traders anticipated a fresh round of US Federal Reserve monetary easing that would boost growth prospects and cut unemployment, but are now stalling around $80 to $85 as the market weighs immediate economic conditions against future policy moves.

New claims for jobless benefits in the US unexpectedly rose last week, a report showed on Thursday, weighing on crude prices even as the data bolstered the case for the central bank to pump more money into the economy as soon as next month.

Opec stands PAT

The Organization of the Petroleum Exporting Countries on Thursday kept intact a supply policy that has served it well for nearly 2-year and set aside concerns a weak dollar could drive the oil price too high for a fragile world economy.

“The biggest challenge we have is to keep the oil market as it is today," Saudi Arabian oil minister Ali al-Naimi told reporters, indicating his satisfaction with current prices.

For Opec, “what might in advance have looked like a potentially difficult year has instead turned out to be a very constructive one in terms of revenue dynamics," Barclays Capital analysts headed by Paul Horsnell wrote in a weekly report.

US crude inventories dipped by 4,16,000 barrels last week, the US Energy Information Administration said on Thursday, far below the 4.1-million-barrel drawdown reported by the American Petroleum Institute on Wednesday, but against a Reuters poll forecast for a 1.1-million-barrel increase.

Gasoline stocks fell by 1.8 million barrels, more than expected, while distillate supplies, which include heating oil and diesel, dropped by 2,55,000 barrels, less than forecast.

“The inventory drawdowns in crude oil and oil products look constructive at first glance," Graber said.

“However, stockpiles fell because of sharply lower imports and an unexpected drop in refinery utilisation and not because of improved US oil demand, which remains soft."

The oil market was awaiting Friday’s US government data on consumer prices and retail sales in September and a preliminary reading of consumer sentiment so far this month.

Fed chairman Ben Bernanke’s speech in Boston could provide clues on what monetary authorities are planning to do next.

Investors took profits on gains in stocks and commodities this week while buying back the US dollar on Friday, but kept the currency close to a 10-month low.

Nationwide strikes paralysed oil refining in France on Thursday, with all 12 plants disrupted and the government trying to reassure the public about fuel supply as panic buying led to brief shortages at petrol stations.