Crude started to climb again despite the widely predicted US snowstorms failing to materialize.
In London, IPE Brent opened on $26.63 after settling Tuesday’s contract on $26.48 and by mid Wednesday morning, a barrel of Brent was higher again at $26.68, according to news agencies.
Huge snow drifts that were forecast for the north-east of the US did not materialized, while New England did get around a foot of snow, it was hardly the market shaping weather some had predicted.
Elsewhere, and crude support came in the form of comments attributed to the Venezuelan foreign minister Luis Alfonso Davila who said there was still room for debate on the production question by labeling $27 as the “right price for oil”.
But any negative sentiment would have been buoyed by an appeal by the Indonesian oil minister Yusgiantoro to cut output. He claimed the market was “over supplied with crude” and that prices could fall to below $20 a barrel if production remains unchanged.
The EIA was also drawn in to the ‘will they, won’t they’ debate by claiming inventories could balloon by 50 million barrels if output was maintained at present levels.
The comments followed further whispers from the a Saudi source’ who said a cut was now in the very probably status, according to a international news agency.
But it was the latest API report with its significant 3.89 million bpd draw in crude that lent the real support to the markets.
It now means that three consecutive weeks of draws have led to US crude stocks falling to almost 15 million bpd below the figures from 12 months ago.
Draws were also seen in gasoline and distillates while demand remained largely unchanged from last week.
But equally, it is worth noting that US refineries have now come out of maintenance and capacity utilization is 3.3 per cent above a year ago.
© 2001 Mena Report (www.menareport.com)