LONDON, Oct 10: World oil prices steadied on Wednesday as traders paused for breath following recent volatile trade, analysts said.
They added that prices were supported by tight energy supplies and the prospect of lower American interest rates, which could increase global crude demand because the United States is the world’s biggest energy consumer.
In London on Wednesday, the price of Brent North Sea crude for November delivery added one cent to $77.50 per barrel.
New York’s main futures contract, light sweet crude for delivery in November, was unchanged at $80.26 per barrel.
Prices had rebounded sharply by a dollar on Tuesday, after slumping by more than $2 on Monday amid concerns over the rebounding US currency, which has since fallen against major rival currencies.
“Oil prices remain well supported by concerns over tight fuel supplies and prospects for an increased demand next year,” said Sucden analyst Michael Davies.
“The demand prospects also appeared to have been boosted by expectations of further US interest rate cuts following Tuesday’s (Federal Reserve) minutes release.”
Meanwhile, the US Energy Information Administration (EIA) was due Thursday to reveal the state of American crude oil inventories in the week ending October 5.
The weekly report is being published one day later than usual owing to the Columbus Day public holiday in the United States on Monday.
“There is a bit of trading sideways ahead of the data,” Davies said of Wednesday’s price action.
The US report is widely expected to show a fall in distillates, including crucial heating fuel, ahead of the peak-demand northern hemisphere winter months.
Heating costs for US households will take a bigger bite out of incomes in the upcoming winter season as energy costs hover near record levels, according to a US government forecast on Tuesday.
Households using natural gas are expected to spend 10 per cent more this winter, or an extra $78 in fuel costs. About 58 per cent of Americans use natural gas as their primary heating source.
Those using heating oil (seven percent of US households) will pay even more, with costs expected to rise 22 per cent from a year ago, adding an extra $319 to the seasonal bill, the report added.
The EIA also said it sees demand higher based on a government report projecting this coming winter will be four per cent colder compared with last winter. —AFP
