Oil reverses light losses


Oil reversed the previous day's light losses on Wednesday as traders marked time ahead of oil stockpile data expected to show inventories in the United States staying well above seasonal norms amid a mild start to winter.

U.S. light, sweet crude for December <CLc1> rose 19 cents to $58.47 a barrel by 0804 GMT, recouping more than half of Tuesday's 30-cent fall and remaining firmly entrenched in the $56-$62 band that has bound prices since early October.

London Brent crude <LCOc1> was up 18 cents at $59.02.

In the face of unseasonably warm weather in the U.S. Northeast -- the world's top consumer of heating oil -- stocks of distillate fuels were expected to have eased by just 400,000 barrels last week, an expanded Reuters poll of 13 analysts found. <EIA/S>


But with U.S. heating oil stocks about 7 percent above year-ago levels and this week's heating demand in the Northeast expected to be a third less than usual, the decline may be too modest to help pull prices out of their six-week rut.

"Oil markets remain unconvinced about fundamentals firming," said UBS analyst Jan Stuart.

Stuart said quickening oil demand growth and moves by OPEC's top producers to cut back supplies as part of the group's 1.2 million barrels per day (bpd) curbs should help draw down inventories, but traders have lately been more preoccupied with concerns about the global economy and OPEC compliance.

Top exporter Saudi Arabia has led producers in cutting supplies to adhere to OPEC's accord, and has extended curbs imposed from November 1 through December for customers in Europe and the United States. However, it will slightly increase supplies for some Asian refiners, buyers of Saudi crude said this week.

A senior Kuwait energy official said on Tuesday that the group believes prices should be between $55 and $60 a barrel, indicating the group may be satisfied with oil's recent range. He did not specify whether he meant OPEC's basket price or U.S. oil.  
The OPEC basket price is typically $3-$5 below U.S. benchmarks.

Prices have traded in range since early October after slumping about 25 percent from an all-time high of $78.40 a barrel in mid-July amid healthy global stocks, worries about the U.S. economy and the retreat of some speculative players.

"Partly as a result of a lack of price action, speculative net length in the petroleum market has disappeared," Merrill Lynch analyst Francisco Blanch said in a report.

"Non-commercial petroleum product futures and options net length stands at the lowest level since December 2004."