Sun, Nov 28, 2004 - Page 10 News List

Oil rises on concern over US stocks

AFP , LONDON

Oil prices rose in London on Friday in thin trading as analysts gauged the impact on key markets of a possible dearth of US heating oil stockpiles during the northern winter.

In London, Brent North Sea crude oil for January rose US$0.20 to US$44.86 a barrel in late deals.

Trading in New York's main oil contract, light sweet crude for January delivery, remained suspended because of the Thanksgiving holiday in the US on Thursday.

New York oil closed up US$0.50 at US$49.44 a barrel on Wednesday from the price on Tuesday.

After much volatility in recent weeks, oil prices were finding a more stable footing, said Richard Slape, analyst at Seymour Pierce.

"We always anticipated that it [Brent] would stabilize somewhere in the US$40-US$45 levels," he added.

Markets are worried, however, that a cold winter in the northern hemisphere will push up demand at a time when US heating oil stocks are 14 percent lower than a year earlier.

"The key thing at this time of year is clearly the fuel oil stocks and they are much, much lower than they were 12 months ago," Slape said.

Supply concerns linger despite US government inventory data showing a build in distillate stockpiles, the first for 10 weeks.

The US Department of Energy on Wednesday reported that distillate stockpiles, including crucial heating oil inventories, rose by 1 million barrels to 115.6 million barrels in the week ending Nov. 19, breaking a nine-week streak of declines.

The American Petroleum Institute, a private trade association, reported an even larger build-up of 1.82 million barrels to 117.6 million barrels.

Traders were meanwhile keeping a close watch over Iraq, where a key pipeline linking Iraq's northern oil fields to a major refinery had been attacked on Thursday, a local oil official said, although the national guard denied this.

The reported attack came two days after the Iraqi national guard deployed some 2,000 men to take over responsibility from private security firms and tribal organizations for the protection of the pipeline.

Meanwhile, crude production from southern Iraq was cut by half owing to maintenance work carried out by the US firm Halliburton, a source from the South Oil Company said late on Thursday.

Production fell from 1.8 million barrels per day to 950,000 barrels per day, the source added.

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