LONDON (Reuters) – Oil slipped towards $80 a barrel on Wednesday as investors cashed in on the previous day’s rally sparked by concerns of a heating fuel crunch this winter.
Europe’s oil inventories declined in September, industry monitor Euroilstock said on Tuesday, while forecasts of colder weather this year in the United States have led to expectations of higher demand for heating oil.
U.S. crude for November slipped 8 cents to $80.18 a barrel at 4:40 a.m. ET, after gaining more than $1.24 on Tuesday. London Brent crude shed 4 cents to $77.45.
“We have to keep an eye on the lower stock levels, but that will be more of the focus in November,” said Ken Hasegawa of Fimat Japan Inc. “It’s still a little early, but this concern will always support the market.”
U.S. weekly oil inventory, due out on Thursday, are expected to show a 900,000-barrel build in crude stocks, a 400,000-barrel draw in distillates — including heating fuel — and a 100,000-barrel build in gasoline.
The U.S. Energy Information Administration (EIA) said consumers in the world’s top energy market will pay 10 percent more to warm their homes this winter than last year.
Government weather experts say this winter will be colder than last year’s, but warmer than the norm.