VIENNA, Austria, (AP) – Oil prices rose above $60 Thursday in reaction to figures showing lower U.S. gasoline and diesel fuel inventories and to leadership changes in the U.S. Congress following midterm elections.
While prices were holding in the $58-$60 a barrel range for now, they were expected to rise as the Northern Hemisphere winter season cranks up demands on heating fuel.
Light, sweet crude for December delivery rose 40 cents to $60.23 a barrel by midday in Europe in electronic trading on the New York Mercantile Exchange. December Brent crude on London’s ICE Futures exchange was up 73 cents at $60.32 a barrel.
“The market is really still range-bound,” said Victor Shum, an energy analyst with Purvin & Gertz in Singapore. “The rise is due to a combination of the inventory report and … some uncertainty in the U.S. due to the change in leadership in the House of Representatives.”
In U.S. midterm elections, Democrats won control of both the House of Representatives and Senate, giving the party complete domination of Capitol Hill for the first time since 1994. Vienna’s PVM Oil Associates said the Democrat wins are “likely to result in several changes in the country’s energy policy,” such as potential cutbacks on tax break for big oil companies and a greater emphasis on clean energy.
U.S. crude inventories rose last week by 400,000 barrels to 334.7 million barrels, but gasoline inventories fell by 600,000 barrels to 204 million barrels, the U.S. Energy Information Administration said Wednesday.
Also, distillate fuel inventories fell by 2.7 million barrels to 138.6 million barrels, the EIA said. Distillates include heating oil and diesel fuel; heating oil inventories rose slightly last week, but were offset by a huge 10 percent decline in diesel inventories.
Heating oil futures rose 1.66 cents to $1.7272 a gallon on the Nymex, unleaded gasoline futures were essentially steady at $1.5640 a gallon, and natural gas futures gained 10.7 cents, selling for $7.930 per 1,000 cubic feet.
U.S. oil supplies are still ample — above the average for this time of year. But oil prices remain buoyed by some OPEC ministers saying another production cut may be in order, strong demand and weather forecasters predicting a colder-than-normal winter in some parts of the United States.
“The next move in the oil market depends on winter season weather, on how cold it gets,” Shum said. “And also on indications of the extent of output cuts from OPEC.”
The market is considering whether the Organization of Petroleum Exporting Countries would make additional production cuts in December following a plan to reduce oil output by 1.2 million barrels a day starting Nov. 1. Since the announcement in mid-October, analysts and traders have questioned how many of the 11 OPEC members will deliver on the cuts they’ve promised.
Qatar’s oil minister, Abdullah Al-Attiyah, said Wednesday he is confident that all OPEC members will comply with their recent pact to cut oil supplies.
OPEC President Edmund Daukoru, also Nigeria’s oil minister, said this week that low prices may encourage the oil cartel to further cut its output, but it doesn’t have a specific price floor or band that it wants to defend. The group would discuss production at a December meeting in Abuja.
Oil prices have tumbled from a July high above $78 a barrel, trading in a range of around $57-$61 a barrel over the past month.