Midweek US government report expected to show crude stocks fell; oil prices up

Photo: Midweek US government report expected to show crude stocks fell; oil prices up

The U.S. is expecting that midweek U.S. government report will show crude stockpiles fell for a fifth straight week. Oil prices rise.

The averaged forecasts of nine analysts polled by Dow Jones Newswires say that Wednesday’s report by the U.S. Energy Department's Energy Information Administration for the week ended Dec. 14 will show U.S. crude supplies were down1.3 million barrels.

The levels would still be "slightly above the 5-year average ... (but) some 20 million barrels below figures from the past two years," Vienna ’s PVM Oil Associates said.

In London , Brent crude futures added 14 cents to US$91.43 a barrel on the ICE Futures exchange. And in European electronic trading on the New York Mercantile Exchange light sweet crude for January delivery rose 67 cents to US$91.30 a barrel by midday .

Brent crude achieved US$91.53 on London 's ICE futures exchange, adding 25 cents.

The EIA report is also expected to show distillate inventories fell about 300,000 barrels while gasoline stockpiles are forecasted to rise 700,000 barrels.

The Nymex crude contract fell 64 cents Monday to settle at US$90.63 a barrel on concern that a slowing U.S. economy may weaken crude demand.

Despite Tuesday's upward trend, many analysts believe the market's sentiment has changed from bullish to negative amid a number of reports that oil demand and economic growth are weakening. Friday's U.S. government report that consumer inflation jumped in November by the largest amount in more than two years continues to weigh on markets.

An OPEC official's comment that the cartel may boost output also helped ease prices Monday.

"I would not exclude the possibility of increasing production if the market wants it," said Chakib Khelil, Algeria's oil minister, who takes over as president of the Organization of Petroleum Exporting Countries on Jan. 1.

Still, Khelil, who spoke to reporters at a Mediterranean energy conference in Cyprus, also said current oil supplies are sufficient.

PVM said that the 10 OPEC nations under production ceilings are now pumping around 27.63 million barrels a day, almost 580,000 barrels a day more than in November and over 400,000 barrels above the overall OPEC daily quota.

"The higher supply is mainly the result of the ... (United Arab Emirates) production returning back to normal levels after heavy maintenance in November," it said.

While oil prices rose slightly last week, they remain nearly US$10 a barrel below November's record highs.

Heating oil futures added over a penny to US$2.6103 a gallon (3.8 liters) while gasoline prices rose 0.69 of a cent to US$2.335 a gallon. Natural gas futures gained a cent to US$7.045 per 1,000 cubic feet.