Oil prices rose more than 1 per cent this morning, reversing day-ago losses as traders focused on short-term factors like cold US weather and an Australian cyclone, despite forecasts of a further rise in US crude stocks.
Prices had earlier advanced more than a dollar, boosted partly by cold weather in top energy consumer the United States, plus signs OPEC oil supply cuts may have begun to bite.
US light, sweet crude for March delivery fell 66 cents to $45.07 a barrel by 12.59pm. It earlier touched a session high of $47.49 a barrel and a session low of $44.40. US crude has rebounded from below $33 a barrel in the past week.
London Brent crude fell 92 cents to $46.04 a barrel.
"The retreat toward the lower end of the trading range is suggests the market is anticipating stock builds in the API figures," said Christopher Bellew of broker Bache Commodities Ltd.
The American Petroleum Institute (API), an industry body, has moved publication of its weekly inventory report to 9.30pm on Tuesdays from Wednesdays, a day earlier than official government inventory data released tomorrow.
The government data is forecast to show that US crude oil stocks rose a further 2.7 million barrels last week, the fifth straight week of gains.
Colder weather is expected to help draw down distillate stocks by 800,000 barrels, according to a Reuters poll. Gasoline stocks are likely to have risen by 1.3 million barrels.
The US cold snap has helped prices move up from lows earlier in January of $32.7 a barrel, but analysts say the recovery may be temporary.
"Unless OPEC production cuts in January were substantially greater than what we have assumed, it is still too early to be calling an end to this current bear market," Goldman Sachs said in a research note.
Oil's supply/demand picture remains weak, Goldman said, pointing to a large counter-seasonal stock build in the United States and extremely weak demand in China, the world's second largest energy consumer.
Reuters