AP: Oil above $82 as traders eye US supplies, OPEC
Oil prices rose above $82 a barrel Wednesday after a report showed U.S. crude inventories grew less than expected last week and OPEC decided to keep its output targets unchanged.
By early afternoon in Europe, benchmark crude for April delivery was up 53 cents to $82.23 a barrel in electronic trading on the New York Mercantile Exchange.
The contract rose $1.90 to settle at $81.70 on Tuesday after the Federal Reserve said it plans to hold interest rates at record lows.
Crude inventories rose 400,000 barrels last week, the American Petroleum Institute said late Tuesday. Analysts had expected an increase of 1.9 million barrels, according to a survey by Platts, the energy information arm of McGraw-Hill Cos.
Inventories of gasoline and distillates fell, the API said.
The Energy Department's Energy Information Administration is scheduled to announce its supply report — the market benchmark — later Wednesday.
A delegate at the meeting in Vienna of the 12-nation Organization of Petroleum Exporting Countries said the group agreed to keep production targets unchanged while members were asked to curb overproduction, estimated at nearly 2 million barrels a day.
Despite sluggish oil demand from developed countries, some analysts expect growing consumption in Asia to help push prices higher.
"Asia is where all the demand is coming from," said David Carbon, head of economic research at DBS bank in Singapore. "The outlook for commodities like oil just has to be moving up."
Carbon said he expects oil prices to rise about $10 a barrel a year for the next four years.
In the near term, however, demand woes are seen pushing prices lower.
"Given where oil prices are, and barring any major surprises in the EIA data, a modest retrenchment is likely," said Edward Meir, senior commodity analyst at MF Global in New York. "Apart from China, there is little evidence that demand is improving that dramatically so as to warrant a more sizable move into the $85-$90 price band."
Oil prices were also supported by a weaker dollar, which fell after Tuesday's comments from the U.S. Federal Reserve that it would keep a key interest rate near zero to help foster economic growth.
"The central bank reiterated the by now familiar mantra of keeping interest rates low 'for an extended period of time,' Meir said. "It seems (market) participants were expecting a slight tweaking to the Fed's language, and the fact that they did not get it led to widespread dumping of the greenback."
The euro rose as high as $1.3817 on Wednesday before settling back to $1.3768, down just slightly from $1.3778 in New York late Tuesday.
In other Nymex trading in April contracts, heating oil rose 1.11 cents to $2.1254 a gallon, and gasoline gained 1.73 cents to $2.2923 a gallon. Natural gas fell 1.8 cents to $4.329 per 1,000 cubic feet.
In London, Brent crude was up 68 cents at $81.21 on the ICE futures exchange.
