Oil Prices Hold Firm Above $47 a Barrel
Tue Feb 15, 2005 01:21 AM ET
SINGAPORE (Reuters) - Oil prices held firm above $47 a barrel as worries about a possible cut to OPEC production curbed fears of a slowdown in second-quarter demand.
U.S. oil prices ticked one cent higher to $47.45 a barrel after ending 28 cents higher on Monday, staying within their $45-$50 range since early January. Brent crude edged down 6 cents at $45.47 a barrel.
"We may have reached a price equilibrium. I think long-term we are due to go a bit higher -- and gasoline is what will take us up -- but demand is also decreasing into the second quarter," said John Brady at ABN AMRO in New York.
But until gasoline takes over pole position in the oil market this spring, when U.S. motorists prepare for summer driving holidays, dealers are likely to stay focused on the short-term.
Although demand is set to slide into the weak second quarter at the end of the northern winter, the market was bolstered last week by International Energy Agency forecasts showing stronger demand growth and lower non-OPEC supply.
OPEC's warning of a possible pre-emptive production cut ahead of the cartel's March 16 meeting has also kept traders cautious, particularly with some producers pointing to a new, higher price floor of $40 a barrel for U.S. crude.
"OPEC keeps out there the potential for a production cut, which keeps the market well-supported," Brady said.
Venezuelan energy minister Rafael Ramirez said on Monday it was too early for the Organization of the Petroleum Exporting Countries to decide whether it needed to adjust production levels at its next meeting.
Last Friday, OPEC's acting Secretary-General Adnan Shihab-Eldin told Reuters the oil cartel might need to cut supply for the second quarter even if consumption stayed robust, and would need a faster, bigger cut if demand were to fall sharply.
Expectations for higher crude oil stocks could keep any price gains in check after the U.S. Energy Information Administration releases weekly petroleum supply data on Wednesday.
A Reuters forecast showed crude oil stocks likely rose last week for the first time in three weeks by a mild 1.1 million barrels, keeping a hefty surplus to a year ago.
On the supply side, Iraq has resumed its northern oil exports after flows were halted by attacks since mid-December, industry sources said on Monday.
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