LONDON, 20 January 2006 — Oil prices held firm yesterday near $66 a barrel as tension in producer countries Iran and Nigeria and reduced Russian exports offset an anticipated rise in fuel stocks in the United States. US crude oil climbed two cents to $65.75 a barrel by 1350 GMT. London Brent traded up 26 cents to $64.45.
Adding to a protracted rally, driven by fund-buying and fears of major supply disruption, US prices hit a session high of $66.93 a barrel on Wednesday, the highest for nearly four months. “We are still quite strong in spite of expectations for product stock builds,” said Christopher Bellew of Bache Financial. “Question marks over Nigeria and Iran and the effects of cold weather in Russia, which have reduced exports, are providing a lot of support.”
US inventory data to be released yesterday — a day later than usual because of Monday’s public holiday in the United States - are expected to show stockpiles of heating oil and other distillates rose last week by 2.3 million barrels as mild weather curbed demand. A Reuters survey also forecast gasoline stocks would increase by 1.9 million barrels and crude stocks would ease slightly by 400,000 barrels. But analysts warn healthy inventories could very quickly be wiped out by any prolonged supply disruption.
Just over 220,000 barrels per day (bpd), or 10 percent of national output has already been shut in Nigeria following militant attacks.
Against the backdrop of so much supply uncertainty, most predict the Organization of the Petroleum Exporting Countries will leave output unchanged when it meets in Vienna at the end of the month. “OPEC is unlikely to cut production in January as things stand right now,” a senior OPEC delegate said yesterday.
Vienna’s PVM Oil Associates reported, meanwhile, that crude oil exports from Iran to the Ceyhan terminal resumed at a rate of about 200,000 barrels a day, following repairs to pipelines attacked late last year. “In the next days, exports are expected to increase to 400,000 barrels a day,” PVM said in its daily energy market report.