Oil prices claw back ground
LONDON (AFP)
World oil prices firmed on Wednesday before the eagerly-awaited weekly snapshot on US energy inventories in leading consumer the United States.
Traders meanwhile digested news that the Organization of Petroleum Exporting Countries (OPEC) has lifted its forecast for world oil demand growth.
New York’s main contract, light sweet crude for April delivery, added 32 cents to 81.81 dollars a barrel.
London’s Brent North Sea crude for April delivery rose 33 cents to stand at 80.24 dollars per barrel.
“The market is stalling near recent highs with limited upside, while there is not enough momentum to push it higher,” said analyst Andrey Kryuchenkov at VTB Capital.
He added: “Today, the market is turning its attention back to weekly US inventory numbers. We expect a substantial build in US crude stockpiles.”
The US government’s Department of Energy will later publish its weekly snapshot of American crude oil inventories for the week ending March 5.
Analysts said trading was volatile as investors waited for signs of firmer demand after an industry report showed a surprise build-up of crude stocks indicating weaker demand.
The American Petroleum Institute (API) said on Tuesday that US crude stockpiles for the week ended March 5 rose 6.5 million barrels. Analysts polled by Platts had anticipated an increase of 2.1 million barrels.
Oil had fallen on Tuesday, under pressure from a stronger greenback, which makes dollar-priced crude more expensive for buyers using weaker currencies — and tends to weigh on demand.
Across in Vienna on Wednesday, the OPEC oil producers’ cartel slightly upgraded its forecast for modest growth in world oil demand this year, but warned that the slow pace of economic recovery was clouding the outlook.
“World oil demand has been highly dependent upon the world economy, supported by government-led stimulus plans,” OPEC said in its March report.
“These stimulus plans have already done a great job of jump-starting many sectors of the economy, including energy. However, questions remain as to how long governments will be able to afford supporting their economies.”
If such supportive measures were to be phased out, it could have a negative impact on world oil demand, the oil cartel said.
“Given slow global economic recovery, world oil demand growth in 2010 is forecast at 0.9 million barrels per day (bpd) or 1.1 percent, to average 85.2 million bpd,” the report said.
The US economy will play a key role in demand growth, OPEC said.
“Should the US economy have the strength to pull up from the recession early in the year, then the country’s oil demand would show some growth.
“However, should the stimulus plans fade prior to a complete economic recovery, then the country’s energy demand could be negatively affected by slow industrial production and high unemployment.”