Oil prices retreated on Thursday as traders took profits following a strong rally seen a day earlier in response to data showing a fall in United States heating oil stocks as the northern hemisphere winter sets in.
New York’s main oil contract, light sweet crude for delivery in January, fell 44 cents a barrel to $43,75 in electronic trading at about 10.30am GMT.
US prices soared by more than $2 a barrel on Wednesday, closing above $44 for the first time since December 1.
In London, Brent North Sea crude oil for January delivery lost 79 cents to $41,43 in late-morning electronic deals, having leapt by almost $3 a day earlier.
”It is a little bit of profit-taking after yesterday’s gains,” said Investec Securities analyst Bruce Evers.
Speculators had sold oil on expectations of a fall in prices, so when the data was released they were forced to buy oil to square their positions, he said.
The widely watched US government’s weekly report released on Wednesday showed inventories of crude oil slipped 100 000 barrels to 293,8-million, about average for the season, in the week ending December 10.
Stockpiles of distillates — mostly heating oil and diesel — were unchanged at 119,3-million barrels, just below average.
Inventories of heating oil, however, fell 100 000 barrels to 49,9-million. Diesel rose 500 000 barrels to 68,3-million.
”Stocks continue to trend down,” said Evers. ”I suspect that next week, we will see quite a big draw with the very cold weather that they are having [in the United States] at the moment.
”That will put heating oil inventories to very low levels. If we are due for a long period of cold weather, a couple of months or so, it’s going to make the market very nervous and people will be reluctant to push prices down again,” he added. — Sapa-AFP