Oil eases below Rs3,700 after 5% overnight jump

Oil eases below Rs3,700 after 5% overnight jump

Seoul: Oil prices eased below Rs3,700 a barrel on 13 December, taking a breather after a rally of almost 5% in the previous session on a drawdown in US crude stocks and a move by major central banks to ease tight credit conditions.

US light, sweet crude futures fell 44 cents to $93.95 a barrel in Globex electronic trading by 0307 GMT, paring Wednesday’s jump of more than $4 a barrel as traders questioned whether the central banks’ move would solve the credit crunch.

London Brent crude fell 52 cents to $93.50 a barrel.

“NYMEX prices fell because of a technical correction, after rising more than $4 during floor trading last night," said Shuji Sugata, manager at Mitsubishi Corp Futures Ltd.

The US Federal Reserve will band together with its counterparts in Europe, Japan, Canada and Britain to shore up liquidity in financial markets.

This marks their first coordinated action since terror attacks shut down US financial markets on 11 Septemebr, 2001, and boosted markets overnight.

Oil prices have come under pressure in recent weeks, easing from a record $99.29 hit on 21 November because of concerns over the impact of tight credit conditions on economic health of the world’s top consumer, the US.

A sharp 700,000-barrel decline in US weekly inventory data on Wednesday, which sent stockpiles down to their lowest since March 2005, also supported oil prices.

Distillates stocks fell 800,000 barrels, while gasoline inventories rose 1.6 million barrels, the data showed.

Exxon Mobil Corp said operations at its 150,000 barrel per day (bpd) Los Angles-area refinery in Torrance, California, were returning to normal on Wednesday after two steam boilers were relit, marginally lifting pressure off the market.

Trading of NYMEX futures contracts on the CME’s Globex electronic platform resumed earlier in the day after a technical glitch that halted activity for over an hour.

Prices returned to normal around midnight GMT.

“I don’t think the computer mishap had any impact on pushing down prices," Sugata said.