LONDON, 29 October 2004 — World oil prices clawed back from heavy losses yesterday as worries about tight winter supplies in the United States resurfaced despite a rise in crude oil stockpiles.
New York’s main contract, light sweet crude for delivery in December, fell to as low as $51.29, down seven percent from Tuesday’s joint-record closing high of $55.17. But US crude futures later pared losses to stand at $52.30 a barrel in late morning deals, down 16 cents from the previous close.
In London the price of Brent North Sea crude oil for delivery in December also rebounded from its lows of the day to stand at $49.25 in late deals, a drop of 20 cents. “The oil price has bounced back from the very low levels we’ve seen. The question is now whether there is going to be recovery,” said Prudential Bache broker Christopher Bellew. It was “hard to say” whether that would happen, he said. “But we are seeing some support coming at these low levels.”
News that China’s central bank is to raise interest rates for the first time in nine years hit the prices of some commodities amid concerns the move could reduce the Chinese economy’s voracious appetite for raw materials. But traders said the announcement did not appear to have affected crude prices significantly. “In theory it could reduce demand from China, so it is bearish. But I don’t think it is a factor,” said Bellew.
World crude oil prices began plummeting Wednesday following news of a 4.0-million-barrel weekly surge in US crude oil stockpiles that calmed market fears of a supply crunch during the northern hemisphere winter. “With crude stocks having built up last week, it means that US refiners are in a good position to cope with the winter demand on heating oil,” Deutsche Bank analyst Adam Sieminski said. The crude rise eclipsed news that heating oil inventories, in high demand in the northern hemisphere winter, slipped 600,000 barrels to 48.9 million.
New York’s benchmark contract plunged $2.71, or 4.9 percent, to close at $52.46 a barrel Wednesday, a three-week low. But some analysts were taken aback by the market’s reaction and said prices were likely to resume their upward march. Others were less bullish, however.
