World Oil Prices Steady After Six Year Highs

Gold, grains and copper have also been hit by sell-offs this week as speculative money sees a more lucrative return in equity and bond markets than it does in the commodities sector.

London December futures for bell-wether North Sea Brent blend traded little changed shortly after the opening yesterday at $22.67 a barrel.

Oil was sold heavily in New York and London on Thursday as the investment funds took the view that Brent was unlikely to stage a quick return to a $25.06 peak since two weeks ago.

It lost 90 cents on Thursday and has slipped more than $2 in two weeks but is still $5 higher than it was a year ago.

 

The bulls have taken a serious blow, said analyst Charles Gray at brokerage Prudential Bache.

Gray said important technical markers for investment funds were swept away as dealers decided stocks of heating oil in the United States were on the mend.

Low heating oil stocks have underpinned oil prices since the summer amid concern over possible shortages this winter.

But US refinery heating oil output hit record levels last week and industry data showed a significant rise in stocks.

The head of the American Petroleum Institute, Charles DiBona, on Thursday said worries over low stocks were overdone.

Heating oil stocks are, however, still well below normal levels for the time of year and few analysts expect crude to slip quickly back below $20. I dont think we can write this market off yet its far too early in the winter, said Russell Hill, senior crude trader at Austrian oil company OMV in London.

News on Thursday that two rival Kurdish factions had agreed to extend a US brokered ceasefire in northern Iraq has also undermined the oil market.

In Ankara, US envoy Robert Pelletreau said rival Kurdish groups had agreed to extend a ceasefire in northern Iraq with a view to making it permanent. A UN oil-for-food exchange was put on hold at the end of August when clashes made it unsafe for UN monitors.

Dealers still do not expect any early move to put the Iraqi oil sale back on track, partly because the United States insists the whole deal must be renegotiated.

I suppose this puts oil-for-food back on the map but thats not the real reason this market came off, said a dealer in London. Basically the market lost its nerve.