Oil prices trade below 100 dollars in Asia

Fri, Feb 22 2008, 04:00 GMT
http://www.afxnews.com

SINGAPORE (Thomson Financial) - World oil prices were trading below 100 dollars in Asian trade Friday after a stronger-than-expected rise in US crude oil reserves calmed supply jitters.

In morning trade, New York's main contract, light sweet crude for delivery in April, fell 31 cents to 97.92 dollars per barrel.

The contract closed 1.47 dollars lower during floor trading on Thursday at the New York Mercantile Exchange.

The March contract had expired Wednesday at an all-time closing high of 100.74 dollars after scaling a peak of 101.32 dollars a barrel.

Brent North Sea crude for April delivery rose 5 cents to 96.29 dollars a barrel, after falling 2.18 dollars on Thursday. The contract had struck a record peak of 99.22 dollars on Wednesday.

"Oil has decoupled from the larger economy in the past week but the bigger picture is that fundamentals are still strong and there is still not enough spare capacities," said Tony Nunan of Mitsubishi Corp's petroleum business in Tokyo.

"Prices in the short term will still go down but will stay supported in the middle to long term."

The US government's weekly report on energy stockpiles helped ease market worries about supply, heightened by speculation that the Organisation of the Petroleum Exporting Countries (OPEC) is planning to cut production.

The US Department of Energy (DoE) said crude oil stockpiles rose for the sixth consecutive week, by 4.2 million barrels in the week ended February 15.

That soundly topped analysts' consensus forecasts of a 2.6 million barrel increase.

Gasoline inventories grew by 1.1 million barrels last week, the DoE said, outstripping market expectations of a gain of 450,000 barrels.

Stockpiles will continue to increase unless OPEC, which supplies about 40 percent of the world's oil, decides to cut production, said Nunan.

At an emergency meeting on February 1, OPEC maintained its official daily output ceiling at 29.67 million barrels of oil, despite pressure from US President George W Bush to boost supplies to cool high prices that are slowing economic growth.

"There is a clear perception in the market that OPEC would have moved to defend prices had they slipped much below 85 dollars, implying that the downside might be fairly limited even if the market had got through that wall of consumer buying," said Barclays Capital analyst Kevin Norrish.

Libya's oil chief Shukri Ghanem said Wednesday that OPEC will wait to see if prices hold around 100 dollars per barrel before making any decision on output levels.