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Oil hovers above $91 ahead of US stocks data

Singapore, December 30, 2010

Oil held above $91 a barrel on Thursday, ahead of US weekly inventory data expected to show a drawdown in crude stocks for the fourth consecutive week due to an abnormally icy winter.

US crude for February delivery edged up 18 cents to $91.30 a barrel by 0420 GMT. Prices have traded in a tight  range near $91 since hitting a 26-month high of $91.88 on  Monday.

ICE Brent crude rose 16 cents to $94.30.

'The oil market continues to alternate small gains with small declines, as prices idle quietly on light  between-holiday volume,' said Timothy Evans, energy analyst at  Citi Futures Perspective.

The oil market may get the impetus it needs to break  through its trading range with the release of the US Energy  Information Administration fuel stocks report later on Thursday.

Analysts expected a 2.6 million-barrel drop in crude   inventories last week, which would be the fourth straight   drawdown in the world's largest oil user.

Gasoline stocks were forecast up 1.4 million barrels,  while distillates fell 600,000 barrels, a Reuters poll found.

Industry group American Petroleum Institute (API)  confounded analysts expectations on Wednesday by reporting a  3.1 million-barrel rise in crude, while gasoline supplies  dropped 3.1 million barrels in the week to Dec. 24. Distillates rose 1.4 million barrels.

'The API data is certainly known to be more volatile than  the more definitive EIA report, so we would wait to see those  numbers before making any big decisions,' Evans said.

Warmer weather, weaker dollar

Severe cold conditions in the US Northeast, slammed by  one of the worst blizzards on record over the Christmas  holiday, have depleted fuel stocks and added support to oil  prices. 

Warmer weather was expected to return this weekend for the  world's top heating oil market, curbing heating fuel demand  and pressuring crude prices.

Bearish sentiment was offset by a weaker dollar, which hit  a seven-week low against the yen and a 28-year trough against  the commodities-linked Australian currency after traders took  falls in US bond yields as a cue to sell the greenback.

Oil and dollar-denominated commodities often move  inversely to the dollar. A weaker US currency typically  lifts oil prices as it lowers the value of dollars paid to  producers while making it less expensive for oil consumers  using other currencies.

Technicals indicated oil prices may surge to $92.50 after  ending its consolidation period. – Reuters




Tags: Oil | Singapore | Dollar | price | US crude | Inventory |

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