Sun, Dec 24, 2006 - Page 10 News List

Weather forecast causes oil prices to creep downwards


World oil prices crept lower on Friday in quiet holiday trade on expectations that mild US weather would depress demand for energy.

New York's main contract, light sweet crude for delivery in February, lost US$0.25 to close at US$2.41 in a shortened session ahead of the Christmas break.

In London, Brent North Sea crude for February delivery shed US$0.4 to settle at US$62.42 a barrel.

Phil Flynn at Alaron Trading characterized trade as "very quiet," noting that "continuing warm weather could prevent prices to go up too much" after a rally by prices earlier in the day.

Also there was "the Philly Fed number yesterday which could lead to slowing demand," Flynn said, referring to a disappointing manufacturing survey from the Philadelphia Federal Reserve released on Thursday.

The US National Weather Service has said that unusually warm weather is likely to persist into nest month in the world's biggest energy-consuming nation.

"We are already heading into January and we have not had a cold snap," said Steve Rowles, an analyst with CFC Seymour in Hong Kong.

"I think the continued story is the mild weather in the US, signaling decreased demand [for heating oil]," he said.

New US government figures on Wednesday showed distillate products reserves, which include heating oil and diesel, increased 1.2 million barrels to 133.1 million in the week ended Dec. 15.

Analysts had expected a drop of 600,000 barrels.

However, inventories of crude oil slumped 6.3 million barrels to 329.1 million, more than triple the decline expected by analysts.

Fimat analysts said the oil market was unfazed by the latest violence in Nigeria, Africa's biggest crude exporter.

At least three people were killed in an armed attack on foreign-owned oil facilities in southern Nigeria.

Unidentified armed men attacked facilities owned by two foreign oil companies on Thursday, while a third oil major, which was attacked earlier in the week, starting relocating the families of its staff.

Separatist fighters in the Niger Delta are seeking a higher share of Nigeria's oil wealth for the region's ethnic Ijaw people.

The attacks have cut Nigeria's normal production of 2.6 million barrels of crude per day by about 25 percent.

At Friday's prices, crude futures are nearly 20 percent lower compared with their record peaks of more than US$78 per barrel, reached in July and August.

The slide has prompted OPEC to announce twice in recent weeks that it intends to reduce the cartel's total output quota.

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