LONDON (Reuters) – Oil prices were steady below $69 a barrel on Wednesday, supported by perceptions that supply and demand in the world oil market is still finely balanced.
London Brent crude, currently seen as more representative of the global market, was 4 cents down at $68.75 a barrel by 1133 GMT, after a 77 cent drop on Tuesday. U.S. crude fell 18 cents to $65.17 after a 62 cent fall the previous session.
“Even if there is nothing new bullish happening, it’s hard to get too bearish,” said Mike Wittner, global head of energy market research at investment bank Calyon.
He pointed to increases in crude demand as refiners ramp up in the Atlantic basin, strong demand from Asia for West Africa crudes, as well as Saudi Arabia keeping a lid on crude supplies to Asian and European customers in July.
Brent hit a nine-month high above $71 on May 24 partly in response to militant attacks on Nigeria’s oil installations, but prices have since traded in a $2 range near $70 a barrel.
The International Energy Agency, which advises 26 industrialized countries, raised its 2007 world oil demand forecast on Tuesday, putting more pressure on OPEC to relax supply curbs.
The Organization of the Petroleum Exporting Countries, source of more than a third of the world’s oil, agreed last year to lower output by 1.7 million barrels a day, helping to lift oil from around $50 a barrel in January.
But prices reacted only briefly to the IEA report’s bullish view on demand and supply.
“The IEA report and tone has become too predictable,” said Olivier Jakob of oil consultancy Petromatrix. “For OPEC the supply situation is always under control and for the IEA we are always facing an acute shortage. The truth is somewhere in the middle.”
A weekly snapshot of oil inventories in top consumer the United States, due later on Wednesday, is forecast to show a rise in gasoline stocks last week for the sixth week in a row.
Wobbles in world equity and bond markets this week, on fears of interest rate rises to curb inflationary pressures, remained a potentially bearish influence on oil prices. Higher interest rates could cool economic growth and dampen oil demand.