Oil prices were steady in Asian trade on Monday as the market braced for an expected decline in United States petroleum stocks when the Department of Energy releases its weekly report this week, dealers said.
At 12.30pm (4.30am GMT), New York’s main contract, light sweet crude for delivery in October, was up one cent to $64,09 a barrel from its close of $64,08 in the United States on Friday.
The contract had earlier traded as high as $64,24.
“People are positioning ahead of the US [petroleum] report and they are expecting a big drop, I suspect,” said Mark Pervan, a commodities analyst with Daiwa Securities in Melbourne, Australia.
“The market is still jittery about supplies.”
The United States and other industrial powers are releasing emergency supplies from strategic stockpiles to make up for disruption caused by Hurricane Katrina but analysts believe this will provide only short-term relief.
The chief worry is that US refineries, which were already straining to meet robust domestic demand before Katrina struck, will find it even more difficult to find the capacity to turn the extra crude quickly enough into gasoline and heating oil.
Washington is releasing 30-million barrels of oil from its Strategic Petroleum Reserve and its partners in the International Energy Agency are furnishing another 30-million barrels.
However, market players are still mainly concerned over when US facilities in the Gulf of Mexico region, which supplies a quarter of US crude, can resume full production.
In the Gulf of Mexico, 60% of crude production and 38% of natural gas output remain offline, which is still a vast improvement from just before Katrina made landfall on August 29 when drilling ground to a halt.
Prices have eased from the record high of $70,85 a barrel set on August 30, a day after Katrina struck.
Dealers however see little chance of further declines given the market’s underlying supply concerns.
“There is not a lot of downside and the market is prepared to buy at these levels,” said Pervan. – AFP