Oil: Price steady as dealers shrug off US crude draw

NEW YORK - Oil prices held steady on Wednesday (NY time) as dealers shrugged off a government report showing a decline in US crude supplies last week that barely dented a solid year-on-year surplus.

US light crude settled up 6 cents to US$45.46 a barrel, stripping away earlier gains of US$1 immediately after the Energy Information Administration report was released. In London, Brent crude rose 6 cents to US$43.13 a barrel.

The EIA report showed crude inventories fell one million barrels last week, confounding expectations among analysts polled by Reuters for a rise of one million barrels.

But despite the fall, crude stocks remain more than 8 per cent higher than the same time last year.

"Overall, I didn't think that (the data) were that bullish at all, especially when compared with last year," said Kyle Cooper, analyst at Citigroup Global Markets.

Distillate stocks, which include heating oil, fell more than expected after the recent blizzards and cold snap that gripped the US Northeast.

Stocks were down three million barrels, compared to expectations for a 2.1 million barrel drop, according to the weekly EIA report.

But analysts have said that the market's focus is shifting away from heating oil toward petrol due to the approach of spring driving season, with forecasts of a warmer than normal February and March.

US crude has declined about nine per cent since Jan. 25 when prices pushed close to US$50 on concern over cold in the Northeast and jitters ahead of Opec's Jan. 31 meeting.

The Organisation of the Petroleum Exporting Countries left its output unchanged at 27 million barrels per day (bpd), and has since said it is unlikely to change the production ceiling before their next meeting in mid-March.

Top Opec exporter Saudi Arabia has kept March crude supplies to term customers in the United States and Europe steady for March, trade sources said on Wednesday, further reducing the chance Opec will agree an early cut.

Dealers had been wary that rising supplies and declining prices may trigger an Opec cut agreement by telephone.

While weather-related worries have eased in the US, storms in the Black Sea region have disrupted the flow of Russian crude exports.

- REUTERS