December 29, 2006	Friday	Zilhaj 07, 1427

LONDON, Dec 28: World oil prices firmed slightly on Thursday, even though official data revealed a massive drop in stockpiles of US crude last week. The market showed little reaction to the crude figures, preferring instead to concentrate on the fact that the United States is experiencing a mild winter, which has led to lower demand for heating fuel, traders said.

New York’s main contract, light sweet crude for delivery in February, climbed by 17 cents to $60.51 per barrel in pit trading.

In London, Brent North Sea crude for February delivery won 10 cents to $60.62 in electronic deals.

“The markets seem to have assumed a year-end liquidation mode with a singular focus on weather,” Fimat analyst John Kilduff said.

The US Department of Energy said Thursday that crude oil stockpiles slid 8.1 million barrels to 321 million in the week ended December 22. The drawdown was much steeper than the 2.5-million-barrel decline expected by Wall Street analysts.

The DoE report showed levels of distillate products, such as heating oil and diesel fuel, increased 500,000 barrels to 133.6 million over the week, in line with most forecasts.

Oil prices had slumped about $2 over Tuesday and Wednesday, to one-month lows of $60.25 in New York and $60.39 in London.

The drop was because of mild weather in the United States.

The US National Weather Service said that demand for US heating fuel this week would be 23pc below normal.

“We keep on waiting for the cold snap to happen,” said Steve Rowles, an analyst with CFC Seymour in Hong Kong.

“Maybe it’s not going to happen and that’s really going to affect overall demand,” he added.

Sucden analyst Michael Davies said that the US weather situation was “helping to counter fears about the repercussions of UN sanctions on Iran” -- the world's fourth largest exporter of oil.

“Some (in the market) are worried that the country could use oil as a bargaining chip if pushed into a corner,” he added.—AFP