Oil prices were stuck well above $33 a barrel despite slipping slightly Wednesday after the US government hinted it might pump more oil from its Strategic Petroleum Reserve.
Benchmark Brent North Sea crude for December delivery was selling for $33.35 a barrel in afternoon trade, still up from 32.69 dollars at the close Tuesday. Brent had soared as high as $33.98 a barrel earlier.
But in New York, light sweet crude for December climbed in early trading to $34.94 a barrel from 34.87 at the close Tuesday.
Crude prices fell back here after US Energy Secretary Bill Richardson hinted that the United States might release oil from its emergency reserve again. "The options are still on the table," Richardson told reporters at a London conference hosted by the Energy Intelligence Group and the International Herald Tribune, called "Oil and Money."
In September, the US government ordered the release of 30 million barrels of oil from its strategic reserves in a bid to rein in prices that had soared to 10-year highs in recent weeks amid waning crude stocks.
Market players have become increasingly concerned that a cold winter will drain stocks, which Richardson himself admitted were at "alarmingly low levels."
The Organisation of Petroleum Exporting Countries (OPEC) has shown an unwillingness to increase production again this winter because it is worried that prices will slump when temperatures drop in the spring.
Kuwaiti oil minister Sheikh Saud Nasser al-Sabah told reporters at the same conference on Tuesday that another production increase was "out of the question."
Prices have climbed in recent days amid expectations that OPEC may reduce production when it meets again in January, and also in response to strong demand and forecasts of cold weather.
"The general feeling is that crude demand is very strong and the cold weather is causing some panic buying," said GNI analyst Lawrence Eagles. Data published Tuesday showing a fall in US distillate stocks and low US crude inventories had provided "nothing particularly dramatic," he said, but had added to the market's nervousness.
"It's the sort of squeeze you can always end up with when you have stocks at very low levels," Eagles said.The closely-watched figures from the American Petroleum Institute (API) released late on Tuesday showed that US crude stocks increased by 2.52 million barrels last week, while demand for distillate stocks strengthened.
With crude inventories still very low, and forecasts of a cold snap in the United States and much of Europe, traders were concerned that inventories could dwindle further.
"If demand increases from these levels because of cold weather, you could have large stock draws," Eagles said.--AFP.
©--Agence France Presse.
© 2000 Mena Report (www.menareport.com)