LONDON (Reuters) – Oil rose above $44 a barrel on Thursday, supported by wintry weather in the northern hemisphere and reports of lower supply, but traders were wary ahead of U.S. data expected to show a build in crude inventories.
U.S. crude oil stocks are expected to have risen by 1.4 million barrels and gasoline by 1.9 million barrels in weekly data due later on Thursday.
Traders were looking for news of the oil storage levels at the Cushing, Oklahoma, delivery point for NYMEX crude, which have been a drag on the nearby contract for U.S. crude futures.
U.S. light crude for March delivery rose $1.25 to a high of $44.80 before slipping back to $44.67 by 1000 GMT (5 a.m. EST). On Wednesday the contract jumped $2.71 to its highest closing price since January 6.
London Brent crude was up $1.13 at $46.15 a barrel.
Tony Machacek, broker at Bache Commodities in London, said the market was being supported by a variety of factors, including stronger demand for heating fuel and a rally on European and U.S. stock markets, which boosted sentiment.
“Stock markets look less shaky than at the beginning of the week,” he said.
The oil market is paying close attention to crude supplied by members of the Organization of the Petroleum Exporting Countries, which have pledged to cut output in an attempt to bolster global markets.
OPEC President and Angolan oil minister Botelho de Vasconcelos told Reuters this week the 12-member group was fully enforcing its deepest ever oil supply curbs and this should be enough to boost prices.
But analysts say the 4.2 million barrels per day (bpd) of cuts OPEC has promised since September may not be enough to turn the tide on a market that has plunged from a record high above $147 a barrel in July, as the global economic crisis hits consumption.
Global oil demand is expected to contract more sharply this year than previously expected, as the deepening economic crisis spreads to the developing world, a Reuters poll said on Wednesday. World oil demand will decline by 430,000 bpd in 2009 to 85.43 million bpd, it said.
The International Monetary Fund is set to sharply cut growth forecasts this month, Managing Director Dominique Strauss-Kahn said on Wednesday.
The decline in demand is particularly evident in the United States, where the government said U.S. motorists drove 5.3 percent fewer miles in November than they did a year ago, a record decline for the month.
Further indications of the ailing state of demand came from the world’s No. 2 oil consumer, with China reporting growth of just 6.8 percent in the fourth quarter, just shy of market expectations for 7.0 percent. For the whole of 2008, the economy expanded by 9.0 percent, the slowest rate in seven years.
While Chinese crude oil imports in December rose 11.6 percent, refinery production rates fell 7.4 percent from a year earlier, the biggest such drop in seven-and-a-half years, pushing apparent oil demand 5.5 percent lower versus a year ago.