SINGAPORE, (AP) – Oil prices were steady Thursday after falling more than $2 a barrel the previous day amid expectations that U.S. fuel inventory data would show the first increase in crude oil stocks in six weeks.
Light, sweet crude for February delivery added 4 cents to $58.36 a barrel in Asian electronic trading on the New York Mercantile Exchange mid-afternoon in Singapore.
On Wednesday, the contract plunged $2.73 to $58.32 a barrel, the lowest settlement for a front-month contract since Nov. 17, as persistent mild winter weather in the United States led traders to bet on lagging demand for heating fuels. It was the biggest one-day dollar drop since Aug. 17, 2005.
Brent crude for February delivery rose 19 cents to $58.15 a barrel on the ICE Futures exchange in London.
An unusually warm winter in the U.S. has exerted downward pressure on oil prices in recent weeks. The U.S. National Weather Service said above-normal temperatures were likely to continue in the U.S. Northeast at least through mid-January.
Weather has played an increasingly important role in oil prices in recent years. Prices surged to $70 a barrel for the first time in 2005 as Hurricane Katrina ravaged the Gulf of Mexico Coast. They broke above $78 a barrel in July 2006 on worries of another bad storm season, and then sank to $60 a barrel when those expectations weren’t met.
“For now, it still appears the weather outlook will continue to be the focal point for the energy complex,” wrote Mike Fitzpatrick, vice-president for energy risk management at Fimat USA, said in his daily note to clients.
The U.S. Energy Information Administration’s weekly fuel inventories report, released Thursday, a day later than usual due to the New Year’s holiday, is expected to show U.S. crude stocks rose by 930,000 barrels in the week ending Dec. 29, the first time in six weeks, according to a survey of energy analysts by Dow Jones Newswires.
Crude stocks declined more than 20 million barrels in the five weeks ending Dec. 22 as refiners stepped up production ahead of winter and heavy fog in the Houston and Louisiana ship channels caused shipping delays.
Petroleum product stocks are seen rising partly due to sluggish winter demand. Distillate stocks, which include heating oil, diesel fuel, expected to increase by average 1.15 million barrels, while gasoline stocks are forecast to rise by an average of 1 million barrels.
In other trading, heating oil futures rose 0.21 cent to $1.5902 a gallon, while natural gas prices rose 7.7 cents to $6.240 per 1,000 cubic feet.