NEW YORK - Oil prices held firm near US$52 a barrel on Tuesday as cold, snowy weather in the US Northeast kept furnaces blazing, putting strain on already tight heating oil stockpiles.
US light crude futures eased 7 cents to US$51.68 a barrel on the New York Mercantile Exchange, 60
cents below a four-month peak of US$52.28 struck on Monday. London Brent crude rose 5 cents to US$50.11 a barrel on the International Petroleum Exchange.
A blast of cold weather in the Northeast, the world's largest heating oil market, was expected to bring this week's demand for the key winter fuel 14 per cent above normal, according to the US National Weather Service.
US heating oil inventories are already running about 7 per cent below a year ago, even as stockpiles of crude oil and petrol run at an 8 per cent surplus, according to the latest government figures.
The US Energy Information Administration will release its new weekly inventory report on Wednesday morning, with dealers anticipating further declines in distillate stocks, which include heating oil.
Traders said a tight global supply and demand balance and a weaker US dollar has also attracted increased fund interest in recent weeks, keeping prices lofty.
"Commodities seem to be a rather popular alternative (to bonds, equities and the dollar) for funds searching for a trend," wrote Edward Meir of brokerage Man Energy.
"The energy complex has captured its fair share of interest, as evidenced by expanding open interest. Whether this growing level of interest can be rewarded by ever-higher prices remains to be seen," he added.
Headline US$50 crude has led Opec oil producers to back away from talk of a possible output cut for the second quarter.
"The fact that we have over US$50 oil may be softening the need to consider a cut," Opec's acting Secretary-General Adnan Shihab-Eldin told Reuters on Tuesday.
Kuwait, Qatar, Venezuela and Indonesia have come out in favour of keeping Opec's formal output limits unchanged when the cartel meets in Iran on March 16.
Shihab-Eldin has said the group sees a growing consensus that a US$40-50 range is sustainable, backing up comments by Saudi Oil Minister Ali al-Naimi last week that prices could stay in that range this year.
Kuwait's Oil Minister said on Tuesday he wanted Opec's reference price to drop into a US$28-35 a barrel range, as the group discusses how to rejig its oil basket to reflect its low-quality supply.
The group's basket of crudes was last valued at US$46.26 a barrel -- around US$5 less than the front NYMEX price.
- REUTERS
NEW YORK - Oil prices held firm near US$52 a barrel on Tuesday as cold, snowy weather in the US Northeast kept furnaces blazing, putting strain on already tight heating oil stockpiles.
US light crude futures eased 7 cents to US$51.68 a barrel on the New York Mercantile Exchange, 60
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