By Alejandro Barbajosa
SINGAPORE, Jan 4 (Reuters) - Oil slipped from the highest
price levels in more than two years on Tuesday on expectations
that fuel demand will ease after the approaching peak of the
Northern Hemisphere heating season, slowing the drain of U.S.
stockpiles.
U.S. crude for February <CLc1> fell 5 cents to $91.50 a
barrel at 0236 GMT, more than a dollar lower than Monday's
peak of $92.58, the highest intraday price since early October
2008.
ICE Brent <LCOc1> gained 12 cents to $94.96, having topped
$96 on Monday for the first time since 2008.
"Increasing demand for heating oil is helping to reduce
the inventory overhang," said Credit Suisse analysts including
Stefan Graber.
"However, this is likely to be temporary as heating oil
demand usually peaks around mid-January. While the short-term
technical trend and momentum indicators remain positive, we
think that ample OPEC spare production capacity is likely to
cap the upside."
Prices rallied on Monday as accelerating manufacturing
activity in industrialized economies and winter weather fanned
optimism that inventories would continue to drain.
Oil pulled back late in the session on Monday after the
U.S. Interior Department said it will allow 13 companies to
resume deepwater drilling in the Gulf of Mexico without an
additional environmental review. []
Crude oil inventories in the U.S., the world's top
consumer, fell for the fifth straight time last week, down by
1.7 million barrels, a Reuters poll ahead of weekly supply
data showed on Monday.
Refiners continued to use up more of their stored crude
supplies while holding off on imports to lower their year-end
taxes, analysts said.
But U.S. stockpiles of gasoline and distillates including
heating oil and diesel probably increased in the week ending
Dec. 31, analysts said.
Distillate stocks were projected to have gained 300,000
barrels on average as overall demand remained unchanged,
according to the poll, while gasoline inventories were also
forecast to have added 300,000 barrels.
Industry group the American Petroleum Institute will
release its inventory report on Tuesday at 2130 GMT, while the
U.S. Energy Information Administration will follow with
government statistics at 1530 GMT on Wednesday.
MACROECONOMIC BOOST
Manufacturing in the United States and Europe accelerated
in December, while growth in China and India slowed to more
sustainable levels in another boost for the global economic
outlook. []
The deceleration in manufacturing growth in China and
India eased some concerns about possible overheating in Asia.
"We are still positive that growth in Asia will continue
with the caveat that inflationary pressures don't force
governments to undertake tightening measures beyond what the
market is expecting," Chen Xin Yi, assistant vice president at
Barclays Capital in Singapore said.
Total U.S. heating demand this week was expected to be
only 0.5 percent above normal, the U.S. National Weather
Service said, and heating oil demand 4.3 percent below normal.
[]
Looking further out, the NWS six- to 10-day and eight- to
14-day outlook issued Sunday called for below-normal or
much-below-normal readings for the entire nation.
Temperatures in northern Europe also were forecast to be
near to below normal in the six- to 10-day outlooks, according
to private forecaster DTN Meteorlogix. []
U.S. crude futures remain in a stubborn contango, a price
structure whereby prompt oil is cheaper than barrels for later
delivery. This market condition encourages storage.
The spread between front-month February and March crude
futures <CL-1=R> had the premium for March crude at almost $1
on Tuesday.
In other markets, Japan's Nikkei average rose 1.2 percent
on Tuesday after global shares resumed their rally on stronger
manufacturing data the day before.
World stocks rallied in the first trading session of 2011
on Monday, while U.S. Treasuries prices fell as the
manufacturing numbers -- which followed positive U.S. economic
data last week -- suggested the world recovery continues to
gain momentum, encouraging investors to take on more risk.
(Editing by Ed Lane)
