Oil prices pull back in Asian trade

Oil prices slipped in Asian trade Thursday in a pullback after prices rose sharply in US trading hours on an unexpected fall in US stockpiles and forecasts of much colder North American weather, dealers said.

At 11:25 am New York's main contract, light sweet crude for January delivery, was down 18 cents to 62.28 dollars a barrel from 62.46 dollars in late US trade Wednesday when it rose 1.47 dollars to the highest level since October 2. Brent North Sea crude for January lost six cents to 63.01 dollars after a gain of 1.86 dollars. "The market is pulling back after the sharp increase," said Tetsu Emori, chief commodities strategist for Mitsui Bussan Futures in Tokyo.

"Although the stockpiles have decreased, we still have an ample supply but now demand and supply is much tighter," he said. US oil stocks fell 300,000 barrels to 340.8 million in the week ended November 24 - the first weekly drop for one month. Analysts had predicted a fall of 350,000 barrels.

Levels of heating oil, diesel fuel and other distillate products fell 1.0 million barrels to 132.8 million over the week.

That confounded forecasts for a rise of 500,000 barrels, although distillates are still at average levels for this time of year. "It suggests that inventory levels are beginning to come down and if OPEC continues to hold back on crude production, this market will be very tight as we go into the winter," Deutsche Bank analyst Adam Sieminski.

The onset of the northern hemisphere winter traditionally sparks a rush in heating fuel demand and puts crude oil supplies under strain. That strain could intensify if the Organization of the Petroleum Exporting Countries goes through with threats to cut production again when it next meets in Nigeria on December 14. The cartel agreed in October to cut its oil output by 1.2 million barrels per day from the start of November to help support prices, which have fallen from above 78 dollars reached in July.

"I think we will see more hints from the oil ministers leading up to the December meetings but whether they will decide to make further cuts depends on the potentially bullish factors in the market like the weather and geopolitical tensions," Emori said.

According to forecaster AccuWeather, colder than normal temperatures are set to hit the United States northeast from the weekend until the end of next week.

- AFP