Oil steady in Asia ahead of OPEC meeting
Oil prices were steady in Asia below $108 a barrel as investors wait to see if OPEC moves to restrict output at its meeting next week amid a two-month plunge in prices.business Updated: Sep 05, 2008 10:33 IST
Oil prices were steady on Friday in Asia below $108 a barrel as investors wait to see if OPEC moves to restrict output at its meeting next week amid a two-month plunge in prices. Light, sweet crude for October delivery was up 1 cent to US$107.90 a barrel in electronic trading on the New York Mercantile Exchange midday in Singapore. The contract overnight fell $1.46 to settle at $107.89.
"We're definitely in a short-term bearish trend," said Gavin Wendt, head of mining and resources at research firm Fat Prophets in Sydney. "With prices falling so rapidly, I think OPEC would like to protect that US$100 price barrier."
The Organisation of the Petroleum Exporting Countries is scheduled to meet next Tuesday in Vienna and has indicated it may take action to defend the US$100 a barrel level.
Crude has dropped about US$40, or 27 percent, since surging to a record $147.27 a barrel on July 11.
A stronger dollar has also been weighing on oil prices. A rising greenback spurs investors to shift funds out of commodities like oil and precious metals, which are traditionally bought as hedges against inflation.
"It's a big factor," Wendt said. "You've got the dollar on one side and commodities on the other. At least temporarily, the US dollar is recovering."
The euro was steady Friday at US$1.4293 while the dollar was little changed near 107 yen.
A weekly US oil inventory report released Thursday was mixed. The Energy Department's EIA said US gasoline stocks fell by 1 million barrels to 194.4 million barrels for the week ending August 29, less than the 1.8 million-barrel drop analysts surveyed by energy research firm had Platts expected.
The EIA also said U.S. crude stocks tumbled unexpectedly last week. Crude supplies dropped by 1.9 million barrels to 303.9 million barrels; analysts had expected supplies to increase by 500,000 barrels.
Meanwhile, inventories of distillate fuel, which include diesel and heating oil, fell by 400,000 barrels to 131.7 million barrels. Analysts expected stocks to rise by 1.1 million barrels. In other Nymex trading, heating oil futures fell 0.83 cent to US$3.0154 a gallon, while gasoline prices dropped 0.54 cent to US$2.735 a gallon. Natural gas for October delivery gained 5.4 cents to US$7.376 per 1,000 cubic feet.
In London, October Brent crude fell 10 cents to US$106.20 a barrel on the ICE Futures exchange.