Oil down in Asian trade but cold spell to limit fall

December 29, 2010 | 15:46

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Oil fell in afternoon Asian trade Wednesday but the decline was seen as limited with heating oil demand set to stay firm as a cold spell grips the United States and Europe, analysts said.

New York's main contract, light sweet crude for February delivery, sank eight cents to $91.41 a barrel.

Brent North Sea crude for February was down eight cents at $94.30.

Analysts say prices will be underpinned by strong heating oil demand, which has perked up because of the unusually strong cold spell in the northeastern United States and parts of Europe.

"As long as the extreme cold in the northern hemisphere persists, this will lend some support to oil prices in the near term," said Chen Xin Yi, a Singapore-based commodities analyst for Barclays Capital.

US reserves fell by about 15 million barrels in the first half of December in the face of brisk demand and end-of-year inventory adjustments by refiners.

New figures on US stocks are to be published Thursday.

Oil demand from China, the world's biggest energy consuming nation, is also another factor bolstering prices, she said.

"China's demand growth has scaled a new high in November, topping 9.3 million barrels per day, with diesel, jet fuel and gasoline demand all setting record highs in the month," she said.

Barclays Capital predicts oil prices will average $91 barrel in 2011.

AFP

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