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25 April 2024

Oil prices higher in Asian trade

By Agencies

World oil prices were higher in Asian trade on Thursday after US crude inventories climbed at a slower-than-expected pace last week, dealers said.


A dispute that resulted in oil-producing Venezuela cutting supplies to US energy giant ExxonMobil continued to spook the market, they added.


In afternoon trade, New York's main contract, light sweet crude for delivery in March, was up 17 cents to $93.44 (Dh341) a barrel.


The contract closed 49 cents higher at $93.27 (Dh340) during floor trading on Wednesday at the New York Mercantile Exchange.


Brent North Sea crude for March delivery climbed 14 cents to $93.46 (Dh341.13) a barrel.


"The increase in US crude stocks came in smaller than expected, so this is supportive of oil futures," said Victor Shum, a Singapore-based analyst with energy consultancy Purvin and Gertz.


The US Department of Energy said on Wednesday that crude stockpiles rose 1.1 million barrels to 301.1 million in the week ended February 8, smaller than the gain of 2.38 million barrels forecast by analysts.


Shum said the market remained concerned over a decision by Venezuela's state petroleum company PDVSA to suspend oil supplies to ExxonMobil in retaliation for the US firm's effort to freeze billions of dollars in global PDVSA assets.


The Venezuelan oil concern cited "judicial-economic aggression" by ExxonMobil as the reason for its action, which it described as an act of "reciprocity."


"In reality, the number of barrels of crude supplies affected is actually very small. But while market participants understand this, they also realise that Hugo Chavez is a volatile personality," Shum said, referring to the Venezuelan president.


Oil prices were likely to remain strong even after the International Energy Agency (IEA) lowered its forecast for growth in world demand this year to 1.9 per cent from 2.2 per cent, Shum said.


He said the energy needs of China and the Middle East were likely to offset any easing in US demand due to an economic slowdown.


"Both those regional markets are likely to remain strong," he said.


China's demand for oil is forecast to grow 5.8 per cent this year to 7.9 million barrels a day after a 4.5 per cent rise in 2007, said the IEA, energy policy adviser to major industrialised nations.


In light of weaker global economic prospects, the IEA cut its forecast for world demand for oil this year by 200,000 barrels per day. (AFP)