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Oil steadies above $91 ahead of US stocks data

Singapore, December 29, 2010

Oil steadied above $91 a barrel on Wednesday, as forecasts for warmer weather in the  US Northeast offset expectations for a further drawdown in  crude stocks in the world's largest oil user.

Nymex crude for February delivery slipped 12 cents  to $91.37 a barrel by 0305 GMT, while ICE Brent crude fell 14 cents to $94.24.

US oil prices surged to a 26-month high of $91.88 on  Monday, driven by unusually cold weather, rising appetite for  risk assets and signals from OPEC it would not arrest the rally.

'Oil is tracking the cold weather in the Northeast of the  United States and also the dollar against the euro,' said  Tetsu Emori, a fund manager at Tokyo-based Astmax.

Temperatures in the US Northeast were expected to warm  by the end of the week, curbing demand in the world's top  heating oil market and providing relief to New York residents  slammed by the sixth biggest snowstorm on record.

The icy weather has boosted distillate needs, which  includes heating oil and diesel fuel, and US stocks were  expected to have fallen 500,000 barrels last week, a Reuters  poll showed.

Crude inventories in the world's biggest economy were  pegged to have fallen 2.9 million barrels, while gasoline  stocks were seen up 1.5 million barrels.

The American Petroleum Institute is expected to report its  weekly inventory data later on Wednesday, delayed by a day due  to the Christmas holiday. The US Energy Information  Administration (EIA) will issue its weekly report on Thursday.

Oil prices remained strong despite poor US economic data  that dampened growing optimism for a recovery.

US consumer confidence unexpectedly deteriorated in  December, while prices of single-family homes fell almost  double the expected pace in October.

The dollar index, which tracks the greenback's performance  against a basket of major currencies, was largely unchanged at  80.288.

'This is an additional illustration that oil prices want  to advance,' said Cameron Hanover in a research note.

'Investors are especially keen to follow whatever factor is  most supportive of prices moving higher.'

 Evidence of this growing bullish sentiment was provided by  a record high of net long crude oil positions on the New York  Mercantile Exchange in the week to Dec. 21.

Technicals point to oil prices consolidating between  $90.12 and $91.50, with a bias towards a drop to $90.12.

Oil also found support from heavy US holiday travel,  which boosted retail gasoline demand by 4.6 per cent last week.

US gasoline futures rose 0.57 cents to $2.4101 a gallon. – Reuters




Tags: Oil | Singapore | nymex | price | US inventory | ICE Brent |

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