Oil Steadies Above $114 Ahead of US Inventories
By Reuters | 20 Aug 2008 | 05:20 AM ET
Oil prices steadied above $114 a barrel on Wednesday, after a lower U.S. dollar
rekindled buying in oil and other commodities.
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U.S. crude [EMAIL PROTECTED] 114..26 -0.27 (-0.24%)] was flat, rising for a
second day, after prices had slid about 22 percent from the record peak of
$147.27 a barrel in mid-July.
London Brent crude [EMAIL PROTECTED] 113.24 -0.01 (-0.01%)] was steady.
"There could be further upside, but it will not be that much because of the
poor economic outlook (in the West)," said Gerard Rigby of Fuel First
Consulting in Sydney.
The dollar steadied on Wednesday, but was off a seven-month high as concerns
about the U.S. financial system weighed on sentiment for the greenback.
Eyes were also on the upcoming weekly U.S.. oil products data to be released by
the Energy Information Administration later on Wednesday.
On average, the expanded poll called for a 800,000-barrel increase in crude
supplies, while gasoline stockpiles were forecast to show a 2.7 million-barrel
fall, down for the fourth-straight week.
Prices are unlikely to go below $100 a barrel in the short term because robust
demand for crude oil in China and India will help offset bearish sentiment in
the West, Rigby said.
However, Chinese demand for diesel and gasoline is set to fall from its surge
in recent months ahead of the Olympics.
PetroChina and Sinopec will halt diesel imports next month, having bought more
than half a million tons for August.
OPEC-member Venezuela will be proposing an oil production cut at the next
meeting of the oil cartel in September if prices continue to fall, energy
minister Rafael Ramirez told Reuters on Tuesday.
"That is why we won't see prices falling below $112 a barrel," Rigby said.
Political upheaval in producer countries and the threat of bad weather in the
Gulf of Mexico would continue to underpin crude markets.
Unrest in Nigeria would cushion any dramatic fall in prices, as the
deteriorating security situation in the Niger Delta has shut a fifth of its 2
million barrels per day (bpd) oil capacity.
Worries over supplies also came after StatoilHydro said it discovered a small
gas leak in a pipeline between the Kvitebjoern platform in the North Sea and
the onshore Kollsnes gas processing facility, which will reduce oil production.
But gas customers will not be affected by the leakage, it added.
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