Oil sticks above $US63 mark

SINGAPORE - Oil stayed above the US$63 ($91.64) mark on Thursday as dealers waited to see if expected demand on US commercial crude oil stocks would help extend a five-day rally.

US February light crude eased 12 cents to US$63.30 a barrel, still holding most of the US$5-plus gains it has racked up since last week as fresh investor funds stream into the market. London Brent crude slipped 13c to US$61.55.

With a row between Russia and Ukraine over natural gas supplies now resolved, traders will focus on US Government stock data expected to show a decline in crude stocks but a rise in product inventories later in the day.

Russia and Ukraine agreed to a five-year deal on Wednesday after a row over prices that had temporarily disrupted supplies to an anxious Europe, which depends on the giant producer for a quarter of its gas. That initially took prices nearly US$1 lower on Wednesday, but a commodity-wide flush of fund money and forecasts for a decline in crude stocks helped the market close 28c higher.

"Bottomline is this market is going to hold its strength," said Bob Frye, a commodities analyst with the US-based Access Futures and Options Trading, at Woodside, California.

Crude oil prices have gained more than US$5 a barrel or about 8.8 per cent over the past five trading days as investors, keen to boost exposure to a market that has surged by more than a third for two years in a row, plough new money into the market.

US stocks data later on Thursday will provide fresh direction, with analysts forecasting a decline of 1.2 million barrels in crude stocks for the week to December 30 due to lower imports and year-end tax-related inventory liquidation.

Although milder winter temperatures probably helped distillate stocks rise 700,000 barrels last week, gasoline inventories were only expected to rise 400,000 barrels, keeping them in a substantial deficit versus a year ago.

Analysts said that tight supplies and an expected heavy US refinery maintenance schedule might heighten concerns over gasoline supplies, which were stretched thin late last summer after hurricane-related outages in the Gulf Coast.

US refineries have been running at close to full capacity to boost winter fuel supplies and top up gasoline stocks, with some postponing planned maintenance until this year.

February gasoline futures dipped 0.67 per cent to US$1.7725 a gallon in early Thursday trade. Its premium to crude surged 90c on Wednesday, nearing last week's 11-week high and reflecting the supply tightness.

- REUTERS