Oil prices end slide after drop in US inventories

January 06, 2011 | 11:40

(0) user say

Oil prices rose on Wednesday, rebounding from earlier declines after news of another big drop in US crude inventories.

New York's main contract, light sweet crude for February rose 92 cents to $90.30.

Brent North Sea crude for delivery in February rose 97 cents to $95.50 a barrel in London trade.

The US Department of Energy reported that stockpiles of crude oil slumped by 4.2 million barrels during the final week of 2010. Analysts had forecast a drop of 2.2 million barrels.

Crude inventories fell by more than 15 million barrels in the United States -- the world's biggest oil consumer -- during the first three weeks of December due to strong demand.

"Demand is relatively high, that put the bias to the upside," said analyst Rich Ilczyszyn of Lind-Waldock.

After slumping on Tuesday, oil prices remained close to two-year highs and the International Energy Agency warned they were in danger of threatening a fragile economic recovery in developed nations during 2011.

"Oil prices are entering a dangerous zone for the global economy," IEA chief economist Fatih Birol was cited as saying in the Financial Times newspaper on Wednesday.

"The oil import bills are becoming a threat to the economic recovery. This is a wake-up call to the oil consuming countries and to the oil producers."

Should prices again head towards $100, Birol's comments are likely to add pressure on oil cartel OPEC, which last month decided to leave production quotas unchanged despite the rising prices.

Oil hit two-year highs on Monday due to confidence in increased global energy demand after the US economy showed more signs of recovery.

AFP

What the stars mean:

★ Poor ★ ★ Promising ★★★ Good ★★★★ Very good ★★★★★ Exceptional