Oil prices rise

  • Business
  • Wednesday, 19 Dec 2007

SINGAPORE (AP) - Oil prices rose Wednesday ahead of the release of U.S. government data on petroleum supplies expected to show crude stockpiles fell for the fifth straight week. 

Crude futures were also supported by a small-scale incursion by Turkey into northern Iraq on Tuesday that raised worries that the conflict would cut oil supplies from the region. 

Light, sweet crude for February delivery added 29 cents to US$90.37 a barrel in Asian electronic trading on the New York Mercantile Exchange by midday in Singapore. 

On Tuesday, the contract fell 97 cents to settle at US$90.08 a barrel. January crude fell 14 cents to US$90.49 a barrel before expiring. 

Turkey sent hundreds of troops across the border into the frigid mountains of northern Iraq, claiming it inflicted heavy losses on Turkish Kurd rebels. 

However, the incursion did not represent a large-scale push that some feared could destabilize a relatively calm part of Iraq - and which is near the nation's main northern oil fields around Kirkuk. 

Oil futures fell Tuesday after Kurdish officials reported the Turkish ground troops had withdrawn, easing some of the fears of a supply disruption in the region. 

The Turkish military, however, had not confirmed a pullout. 

The threat of just such an incursion was one of the factors behind oil's rise to near US$100 a barrel in November.  

Oil futures have retreated from their record on a view that global stockpiles of crude are growing as demand is falling, but concerns about supply disruptions remain high. 

A report later Wednesday by the Energy Department's Energy Information Administration is expected to show U.S. crude inventories fell 1.5 million barrels last week, according to the average forecast of analysts surveyed by Dow Jones Newswires. 

But activity at the closely watched Nymex physical delivery terminal in Cushing, Oklahoma, may have a larger impact on prices later in the week.  

Falling supplies there are seen as a symptom of a tight market, and those concerns ease when Cushing inventories rise, as they have for several weeks in a row. 

"We will not be surprised by a further increase in Cushing supply,'' wrote Jim Ritterbusch, president of Ritterbusch and Associates in Galena, Illinois, in a research note. 

Analysts also predict inventories of distillates, which include heating oil and diesel fuel, fell by 400,000 barrels last week, while gasoline supplies rose by 700,000 barrels. 

Refinery activity is expected to have grown by 0.3 percentage point to 89.1 percent of capacity. 

Heating oil futures rose 0.64 cent to US$2.5618 a gallon (3.8 liters) while gasoline prices rose 0.82 cent to US$2.3125 a gallon. 

In London, Brent crude futures rose 40 cents to US$90.52 a barrel on the ICE Futures exchange. 

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