Oil prices steady after supply disruptions

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November 22, 2006 05:02
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Crude oil prices showed little movement Wednesday as traders awaited the weekly US oil inventory report, a day after climbing above US$60 a barrel on news of temporary supply disruptions. Analysts are expecting the weekly report to show that US supply of gasoline and distillates -which include heating oil and diesel fuel - dropped last week. Light sweet crude for January delivery fell 3 cents to US$60.14 a barrel in midmorning Asian electronic trading on the New York Mercantile Exchange. Tuesday's above-US$60 closing was the first since Nov. 9, when it settled at US$61.16. The increase came after news that the Trans-Alaska Pipeline was flowing at just 25 percent of its normal 800,000 barrel-a-day capacity, as strong winds disrupted tanker loading. It's not an unusual problem, but it's one that doesn't typically occur until later in the winter. Also driving up prices were shutdowns at Exxon Mobil Corp.'s refinery in Baytown, Texas, America's biggest at 562,500 barrels a day, and Citgo's 156,000 barrel-a-day refinery in Corpus Christie, Texas. On Friday, the December crude contract had closed at US$55.81 a barrel, the lowest settlement for crude since June 15, 2005. Oil prices have fallen by about 23 percent since hitting an all-time trading high above US$78 a barrel in mid-July. They haven't settled above US$62 a barrel since Oct. 1, despite the Organization of Petroleum Exporting Countries' announcement in mid-October that it would reduce output by 1.2 million barrels a day. Skepticism that OPEC members are committing to production cuts, as well as milder-than-normal U.S. temperatures this fall, have moderated prices. In a recent interview with Nigeria's This Day newspaper, OPEC President Edmund Daukoru acknowledged that some group members weren't complying with the cuts, confirming market suspicions. OPEC is scheduled to meet again in Nigeria on Dec. 14, and may announce further cuts. In other Nymex trading, heating oil futures dropped half a cent to US$1.7280 a gallon, and natural gas futures rose 0.2 cent to US$7.990 per 1,000 cubic feet. Because the New York Mercantile Exchange will be closed Thursday and Friday for the Thanksgiving holiday, trading has been light this week. With fewer players in the market, price swings are often larger than they would normally be.

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