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Crude Oil Prices Are Little Changed

Posted on: Friday, 10 February 2006, 09:00 CST

By GEORGE JAHN

VIENNA, Austria - Crude oil prices were little changed Friday as traders weighed a report that demand is falling against worries that supply could be disrupted by unrest or political tensions in major producing nations.

Light, sweet crude for March delivery on the New York Mercantile Exchange slipped a penny to $62.61 a barrel in electronic trading by afternoon in Europe. Brent crude fell 8 cents to $60.67 on the ICE Futures exchange.

Heating oil and gasoline were essentially steady at $1.6679 and $1.5120 a gallon, respectively. Natural gas rose 2.5 cents to $7.504 per 1,000 cubic feet.

The International Energy Agency, the Paris-based energy watchdog, reported falling demand because of the high costs of crude.

The agency maintained its forecast for 2.2 percent oil demand growth in 2006 due to expected strong economic expansion, but slashed its fourth-quarter growth estimate by 420,000 barrels a day to a negligible 80,000 barrels a day.

It pinned the big year-end demand drop on high energy prices, mild U.S. weather that cut heating demand, and market disruptions stemming from Hurricanes Katrina and Rita in the United States.

The IEA also cut its estimates of demand growth in the first and second quarters of this year by 120,000 barrels a day, and by 130,000 barrels a day in the third quarter.

Still, referring to Iran and Nigeria, Vienna's PVM Oil Associates said prices "remain buoyed to a certain extent by supply worries inspired by politics in several hotspots around the world."

A selloff earlier this week came as worries eased about potential supply disruptions from Iran, OPEC's second-biggest crude producer, whose nuclear program sparked political tension overseas and sent oil prices near $69 last week.

A smaller-than-expected decrease in U.S. oil reserves helped push futures lower Wednesday.

The U.S. Energy Department's Energy Information Administration said Wednesday that crude inventories in the United States fell by 300,000 barrels to 320.7 million barrels in the week ending Feb. 3. Stocks of distillates, which include heating oil and diesel, slipped by 300,000 barrels to 136 million barrels, the agency said.

The inventory declines were regarded as modest by traders, as crude inventories remained about nearly 11 percent higher than a year ago and distillate stockpiles are 12 percent higher.

Gasoline inventories increased sharply, by 4.3 million barrels to 223.3 million barrels in the latest week, the agency also reported. It said U.S. natural gas storage fell by 38 billion cubic feet.

Source: Associated Press/AP Online

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