Oil prices slipped Wednesday in Asia after rising sharply overnight on U.S. government predictions that a colder winter ahead will help lift worldwide demand for crude during the fourth quarter.
In a monthly report, the U.S. Energy Department's Energy Information Administration estimated global demand for oil will be 1.8 million barrels a day higher in the fourth quarter than it was during the same period last year. The report follows a prediction last Thursday from the U.S. National Oceanic and Atmospheric Administration that temperatures in the U.S. will be 1.3 percent colder than last year, although they'll be 2.8 percent warmer than average.
Oil prices have been volatile in recent days as investors have debated whether oil supplies are adequate to meet fourth quarter demand. Some investors feel prices have peaked for the year and are due to begin a seasonal decline; others feel prices could rise again and set new records.
Light, sweet crude for November delivery shed 26 cents to US$80 a barrel in Asian electronic trading on the New York Mercantile Exchange by midmorning in Singapore. The contract rose US$1.24 to settle at US$80.26 a barrel Tuesday in New York.
Traders are now looking ahead to Thursday's EIA report on petroleum inventories.
According to a Dow Jones Newswires survey of analysts, crude oil inventories are expected to have gained 1 million barrels in the week ended Oct. 5, while refinery use is expected to have fallen 0.1 percentage point to 87.4 percent of capacity.
Gasoline inventories are expected to have fallen 300,000 barrels last week. Distillates, which include heating oil and diesel fuel, are expected to have declined 600,000 barrels.
November Brent crude fell 21 cents to US$77.28 a barrel on the ICE futures exchange in London.
Heating oil futures shed 0.48 cent to US$2.1805 a gallon (3.8 liters) while gasoline prices slipped 0.72 cent to US$2.0130 a gallon. Natural gas futures added 3 cents to US$6.893 per 1,000 cubic feet.