Oil prices rebounded in late morning Asian trade today after US inventory data showed a decline in crude supplies as a severe North American winter provided strong support for energy demand.
New York’s main contract, West Texas Intermediate (WTI) crude for February delivery, was up 33 cents at $92.66, while Brent North crude also rose 33 cents to $107.48 for February contract.
The US oil inventory recorded a decline by 2.7 million barrels, much bigger than the 600,000 forecast. But gasoline stockpiles rose 6.2 million barrels, well above the 2.0 million consensus estimate of analysts polled by the Wall Street Journal.
Tan Chee Tat, investment analyst at Phillip Futures in Singapore, believes that the supply glut in gasoline “will not have too much of an impact towards market sentiment’’.
“It is normal during winter season for gasoline demand to fall whereas crude oil demand rises,” he said.
“Heating oil demand is likely to scale higher because of the cold snap in the US and this is likely to lead to higher demand for crude oil.”
US stockpile levels
US stockpile levels are keenly monitored by investors as it is an indicator of demand in the world’s largest economy and the biggest oil consuming nation.
But oil prices are likely to continue to face downward pressure with Libyan output up to 546,000 barrels a day from 250,000 barrels a day previously.
Libyan oil output
Despite the increase in output, analysts do not expect Libya to be able to return to its previous output of 1.4 million barrels soon after two oil tankers were stopped on Sunday by Libya’s navy ships from entering the Al-Sedra port in Cyrenaica.
Representatives of the self-declared Cyrenaica regional government had yesterday vowed to resume oil exports, escalating a conflict with the navy.
The Libyan economy has been badly hit by disruption to its key oil and gas sector, which accounts for the vast majority of hard currency receipts and government revenues.