Oil prices rise to near USD95

Oil prices rose Tuesday on expectations of further declines in U.S. crude oil stocks, fueling concerns that supplies may be inadequate going into the Northern Hemisphere winter.

Photo: Oil prices rise to near USD95

Oil prices rise to near USD95

Market participants expect the U.S. Energy Department on Wednesday to report that oil inventories fell last week, in part because of a suspension of output at Mexico's state oil company Petroleos Mexicanos, a major crude exporter to the United States.

Last week, crude futures jumped more than US$4 after figures showed a sharp, unexpected drop in U.S. crude inventories for the second week in a row.

"The oil market is really supported by the tight inventories in the U.S. market and the general expectations for the inventory report this week are that the crude inventories will likely fall," said Victor Shum of Purvin & Gertz in Singapore.

Analysts think some traders and investors will try to push oil prices to the psychologically important US$100 level this week. Crude prices are within the range of inflation-adjusted highs set in early 1980. Depending on the how the adjustment is calculated, US$38 a barrel then would be worth US$96 to US$103 or more today.

"The market remains bullish and seems to be on an upward trend to hit the psychologically important US$100 level. While it is on the uptrend there is a tremendous amount of volatility," Shum said. "It's not unusual to see prices change in a range of US$2 in a day."

Light, sweet crude for December delivery rose 92 cents to US$94.90 a barrel in Asian electronic trading on the New York Mercantile Exchange, midafternoon in Singapore.

Crude stocks are expected to fall by 1.6 million barrels, according to the average forecast in a Dow Jones Newswires survey of energy analysts. Gasoline inventories are expected to increase by 200,000 barrels, while distillates, which include heating oil and diesel fuel, are likely to have fallen 500,000 barrels, the survey showed.

"If (crude) shows a draw, we're definitely going to go back and visit new levels" in oil futures prices, said Tony Rosado of IAG Energy Brokers in Fort Lauderdale, Florida, according to Dow Jones Newswires. "No question about it."

The Nymex crude contract fell US$1.95 to settle at US$93.98 a barrel Monday, weighed down by news of more Citigroup Inc. write-downs, the release of Turkish soldiers that had been captured by Kurdish militants and a fall in U.S. equities.

Traders and analysts said the pull-back was a result of funds and other speculators locking in recent gains in crude prices after some slightly price-negative factors, rather than a change in sentiment that could threaten the continuation of crude's 15 percent run-up in the past month.

Heating oil futures added 1.66 cents to US$2.5605 a gallon (3.8 liters) while gasoline prices gained 1.8 cents to US$2.3991 a gallon.

Natural gas futures lost 5.1 cents to US$7.948 per 1,000 cubic feet.

In London, December Brent crude added US$1.27 to US$91.76 a barrel on the ICE futures exchange.