SINGAPORE, (AP) – Oil prices were flat Tuesday as traders looked for direction following a drop of more than $1 a barrel the day before.
But even with the wide fluctuations in daily trading this month, energy analyst Victor Shum predicted prices in the near term would remain in the range of $50 to $56 a barrel.
“The larger than usual fluctuations in a day of trading are reflective of the conflicting signals in the market,” said Shum, with Purvin & Gertz in Singapore. “The market is seeking direction.”
Light, sweet crude for March delivery rose just 2 cents to $54.03 a barrel in midafternoon Asian electronic trading on the New York Mercantile Exchange. A day earlier, it fell $1.41 to settle at $54.01 a barrel.
March Brent crude at London’s ICE Futures exchange also increased 2 cents to $53.70 a barrel.
“On the one hand, we had cold weather in the Northeast United States driving prices up, but the winter season is coming to an end. On the other hand, we have rather inconclusive data showing the level of OPEC compliance on their output cuts,” said Shum, explaining the recent fluctuations.
He said this week the market will be watching geopolitical developments in Iran and Nigeria, as well as the U.S. inventory report due Wednesday.
In other Nymex trading, heating oil rose 0.39 cent to $1.5528 a gallon; and natural gas futures were up 9 cents to $7.027 per 1,000 cubic feet.
Crude prices are down 11 percent from where they were at the beginning of the year due to unusually warm U.S. weather earlier in the winter.
The return of colder weather to the Northeast, which is responsible for 80 percent of the country’s heating oil consumption, and signs of OPEC compliance with its pledges to cut output led prices to rise by 7 percent last week — the first week this year that prices have finished higher.
But traders are closely watching reports about how many OPEC members were complying with output goals.
The Organization of Petroleum Exporting Countries said it would begin cutting production by 1.2 million barrels a day in November but some traders speculate that some cartel members were not complying. The 12-member group said late last year it planned to cut production an additional 500,000 barrels a day starting Feb. 1.