Rising Oil Prices - 2010 beginning well for oil

    • Rising Oil Prices - 2010 beginning well for oil

      This is an extract from channelnewsasia.com/stories/af…ness/view/1029274/1/.html

      Crude oil prices fell on Thursday in New York after 10 consecutive sessions of gains as a weaker dollar, a Chinese interest rate hike and abundant supply fanned demand worries.

      New York's main futures contract, light sweet crude for February delivery, shed 52 cents to close at 82.66 dollars a barrel.

      The decline snapped the 10-session winning streak that had brought the benchmark contract to its highest level since October 2008.

      In London, Brent North Sea crude for February dropped 38 cents to settle at 81.51 dollars.

      The dollar firmed after Japan's new finance minister, Naoto Kan, spooked financial markets with a call for a weaker yen, raising speculation about government intervention in the market.

      A stronger dollar often tends to dampen demand for dollar-priced crude oil and other commodities.

      On Wednesday, when the dollar was weaker, oil prices rose despite a weaker-than-expected US government report on energy stockpiles.

      "Oil is pulling back on news that China's central bank raised interest rates on its three-month bills for the first time since August, a day after it promised to keep credit growth in check," said Phil Flynn of PFG Best.

      "This slowdown helped end some bullish momentum that was achieved in yesterday's session."

      Traders were looking at signs of weakening energy demand in the United States, the world's biggest oil consumer, despite bitter cold weather sweeping across the northern hemisphere.

      A weekly report on Wednesday by the US Department of Energy (DoE) showed that crude oil reserves rose 1.3 million barrels in the week ending January 1, instead of the expected drop of some 300,000 barrels.

      Stockpiles of distillates - including heating fuel and diesel - fell 300,000 barrels in the week, much less than the average analyst forecast of a drop of 1.8 million barrels.

      "The inventory statistics were very bearish," said Mitsubishi Corp. analyst Tony Nunan.

      "A much bigger draw was expected but... it got a lot colder after that report so we could see much bigger draws in inventories next week."

      Nunan added that geopolitical factors including terrorism concerns in Yemen following the attempted Christmas Day bombing of a Northwest Airlines flight and tensions between the US and Iran could send prices higher.

      "I think that a lot of people realise that there is still a big threat in Yemen which is right next to Saudi Arabia, so that could be a big geopolitical risk issue."

      Saudi Arabia is the largest oil producer in the Organisation of Petroleum Exporting Countries, the cartel that supplies about 40 percent of the world's crude.

      In another development, Iraq and Iran announced on Thursday they would hold talks next week aimed at defining their borders and resolving a dispute over an oil well that has stoked regional tensions and driven up crude oil prices. - AFP/de
    • World Crude Oil Prices

      The price of oil per barrel of crude depends first on its grade, determined by its specific gravity or API and its sulphur content (other factors may interven), and by its location. Other benchmarks include Dubai, Tapis, and the OPEC basket. The Energy Information Administration (EIA) uses the imported refiner acquisition cost, the weighted average cost of all oil imported into the US, as its "world oil price".