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Oil fades toward $47, awaits U.S. data
(Agencies)
Updated: 2004-11-10 14:30
Oil prices fell to seven-week lows near $47 a barrel on Wednesday as traders
braced for another increase in U.S. oil and gas inventories.
U.S. light crude was down 12 cents to $47.25 a barrel, deepening Tuesday's
nearly $2 slide to stand 15 percent below its all-time high reached two weeks
ago, when traders were on high alert over a possible winter supply crunch.
Oil fell from those peaks as speculative hedge funds took profits from this
year's explosive rally to hunt for more returns in recovering equity and bond
markets, cutting their net long positions in crude oil to the lowest level in a
year.
"It's been a factor of funds selling out," said industry analyst Daniel Hynes
of ANZ Bank. "We're coming down to a more sustainable level."
Signs of more slack in the world's tightly stretched supply chain encouraged
their exit, with U.S. Gulf of Mexico production recovering from September's
Hurricane Ivan and crude stockpiles climbing 10 million barrels over the past
two weeks.
Those supplies are expected to rise again in data due at 1530 GMT, with
analysts forecasting a 2.1-million-barrel increase in the week to Nov. 5, the
seventh build in a row.
Dealers will also be keen for news on winter fuel heating oil, included in
distillate inventories, which are forecast to climb a mild 200,000 barrels.
Heating oil stocks have slumped to more than 10 percent below 2003 levels,
but are expected to rebuild soon as milder weather limits demand and refiners
emerge from seasonal maintenance work.
"While the U.S. may be relatively low in heating oil stocks, refining
capacity has improved and crude supplies are plentiful. That realization has had
an effect on the price," said Hynes.
Record high supplies of natural gas, an alternative to heating oil, have also
helped ease concerns.
U.S. natural gas storage levels are set to rise 20 billion cubic feet to
another record high in the next weekly report, to be released a day early at
1700 GMT on Wednesday.
And winter kerosene inventories are recovering in Japan, the world's
third-biggest energy user, as refiners swing back into action, industry data
showed on Wednesday.
Despite the brighter supply picture in major consuming nations, potential
problems loom in top OPEC exporters, most of whom have been pumping full
throttle for months to meet the steepest rise in global demand for a generation.
Nigeria is gearing up for a general strike from next Tuesday, although union
officials said that only a prolonged action would be likely to affect exports.
Edmund Daukoru, Nigeria's presidential adviser on petroleum, said the
industry was preparing contingency plans to head off any disruptions from the
Nov. 16 strike, the fourth this year to protest against rising retail fuel
prices.
Disruptions also continue in Iraq, where saboteurs have stepped up attacks on
the country's oil infrastructure after a two-month lull. Pipeline exports to
Turkey were halted on Tuesday following a brief resumption after last week's
attacks.
China's blazing economic growth, which has fueled much of this year's
unexpected leap in oil demand, is also showing signs of moderating as the
government implements measures meant to prevent the economy from overheating.
The country's industrial output rose 15.7 percent in the year through
October, slowing from 16.1 percent growth the month before. The U.S. Energy
Information Administration cut on Tuesday its fourth-quarter oil demand forecast
for China by 4 percent.
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