Oil held near US$58 a barrel today as trouble at a Canadian refinery countered forecasts that an end to cold winter weather could damp fuel demand in top consumer the United States.
US crude CLc1 settled down 1 cent at US$57.99 a barrel after trading as low as
US$56.62 in earlier activity. London Brent crude LCOc1 rose 17 cents to US$57.60 a barrel.
Oil rallied off lows on news of a fire at Imperial Oil Ltd.'s 118,000 barrel per day (bpd) refinery in Nanticoke, Ontario, and as a steep decline in natural gas inventories pushed up prices for the fuel.
Oil prices had been in negative territory most of the day as meteorologists predicted a break next week in the frigid weather that has slammed into the US Northeast, the largest heating oil consuming region, ushering in milder temperatures that could last into March.
"We expect to see a turn to more moderate temperatures beginning in the later part of next week," said Mike Palmerino of forecaster DTN Meteorlogix. "The last seven days of February we expect to see temperatures returning to more normal levels in the Northeast."
Crude prices had fallen more than a dollar Wednesday after government data showed US distillate stocks, which include heating oil, declined less than analysts had expected.
An unusually mild start to winter in the Northeast helped to push US crude prices to a 20-month low of US$49.90 on Jan. 18. Although prices have since recovered, their rise has faltered around US$60 a barrel.
"The market is still consolidating," said Tom Bentz, an analyst at BNP Paribas Commodity Futures Inc. "It was unable to find any follow-through above US$58."
Some analysts have said the market lacks the momentum to go higher and will probably stay volatile and rangebound.
Data from the US Energy Information Administration Thursday showed inventories of natural gas fell by 259 billion cubic feet last week, just shy of the record draw of 260 bcf set in January 1997. Analysts had forecast a 252 bcf draw.
- REUTERS
