Sun, Feb 01, 2004 - Page 10 News List

Oil prices steady while investors mull varied news


Oil prices steadied on Friday after a week-long sell-off as traders bought back short positions on suspicion prices could yet bounce.

US light crude for March delivery ended up US$0.24 at US$33.05, while heating oil -- one of the most active contracts this week -- settled down US$0.008 at US$91.56 for March.

London Brent crude closed US$0.05 higher at US$29.18.

With much of the Northern Hemisphere winter over, traders and analysts said the longer-term view pointed to a downward correction to end oil's four-month rally, which has seen prices gain 15 percent to date since September.

But they added that the fund led sell-off of the last week may have gone too far, too fast, and that prices could rebound slightly before continuing on a path lower.

"People are very, very cautious about this," said Tony Machacek of brokerage Prudential Bache in London. "It looks as if it should be heading lower, but we have seen this so many times over the last few weeks."

Oil dealers said support from winter heating demand in the US, the world's biggest energy market with consumption of more than 20 million barrels per day, was fading.

US crude stocks have fallen to 28-year lows but the US government's energy statistics arm, the Energy Information Administration, has said heating oil supplies are ample for the rest of winter.

Indications that the OPEC producer cartel is adopting a less hawkish stance towards supply restrictions has also undermined upward momentum.

Late last year some members of OPEC, including leading producer Saudi Arabia, said high oil prices were justified because of the weakness of the dollar, the currency used for international oil trade.

But in recent days, some OPEC ministers have said the group would likely decide to keep official production limits unchanged when it meets in Algiers on Feb. 10, calming fears the cartel might try to cut output to prepare for lower demand in the second quarter.

Algerian oil minister Chakib Khelil echoed the calls in an interview with reporters on Thursday.

"The most comfortable position may be to let's wait and see what happens in the second quarter and we still have our meeting on March 31 to see if we should be doing something there," he said.

Meanwhile, the Russian Natural Resources Ministry has found environmental violations at a subsidiary of the embattled Yukos oil company in the Russian arctic, the Interfax news agency reported Friday.

The ministry said that a check of Arctic Gas Company, a subsoil operator, in the Yamalo-Nenets region in the last two months of last year turned up numerous violations.

The alleged breaches include carrying out work without state ecological approval, unlicensed water use, the construction of roads and wells without planning permission and the unlicensed production of hydrocarbons, Interfax reported, citing the ministry.

There were no details about what action the ministry planned to take.

Yukos has been the focus of a wide-ranging probe by Russian prosecutors and other government agencies, culminating in the October jailing of its then chief executive, billionaire Mikhail Khodorkovsky, on fraud and tax evasion charges and the freezing of about 40 percent of the company's shares. It is also facing a 98 billion rubles (US$34 billion) bill for back taxes, fines and penalties dating from 2000, and probes into its financial records from 2001 to 2002.

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