Oil prices rise above $81 on fund buying
NEW YORK |
NEW YORK (Reuters) - Oil prices rose back over $81 on Thursday after a smaller-than-expected build in U.S. natural gas stocks and a decline in distillate fuel inventories spurred fresh buying by investment funds, dealers said.
U.S. crude settled up $1.50 at $81.44 a barrel, putting it within sight of the record $83.90 a barrel hit September 20. London Brent crude rose $1.78 to $78.97 a barrel.
Heating oil futures gained 2.4 percent or 5.26 cents to settle at $2.2313 a gallon, spurred by continued worries over tight supplies despite forecasts for a warm winter in the United States.
"There has been fund buying on dips, with the fall below $79 seen as a buying opportunity," said Eric Wittenauer of A.G. Edwards in St. Louis.
The U.S. Energy Information Administration said on Thursday that natural gas storage rose by 57 billion cubic feet last week, well short of the 67 bcf build analysts had expected.
The EIA reported on Wednesday that U.S. inventories of distillate fuels, including heating oil, dropped by 1.2 million barrels last week, bringing them about 9 percent below last year's levels.
"Products were supportive yesterday after the (EIA) data showed stock draws and usually, the market revisits the data on Thursdays and you're seeing those supportive data being factored into prices once again," said Tim Evans, analyst at Citigroup Global Markets.
The EIA data Wednesday had also showed a build in domestic crude supplies of 1.2 million barrels last week.
Oil has traded near the $80 mark for about three weeks despite OPEC's agreement on September 11 to boost output by 500,000 barrels per day (bpd) from November 1. Oil ministers from Venezuela, Nigeria and Qatar have brushed off the need for a further output rise, blaming the strength in oil prices on speculators.
Although the end of the peak hurricane season is near, oil traders remain alert for any signs of bad weather.
Thunderstorms associated with a low-pressure system began moving across offshore production areas, but producers and the Louisiana Offshore Oil Port said they had no plans to shut production or evacuate workers.
(Additional reporting by Richard Valdmanis in New York, Randy Fabi and Santosh Menon in London and Angela Moon in Seoul)
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