Oil hovers below $60
Crude prices move slightly higher ahead of weekly report expected to show robust supplies.
February 15, 2006: 5:59 AM EST
SINGAPORE (Reuters) - Oil inched back toward $60 Wednesday after sliding to its lowest level this year the previous day as dealers anticipated a big jump in already healthy U.S. inventories.
U.S. light crude for March delivery gained 15 cents to $59.72 a barrel in electronic trading, recovering from Tuesday's session, when the front-month contract tumbled $1.67 to a low of $59.57. London April Brent crude rose 20 cents to $59.72.
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U.S. crude prices have lost about 12 percent since the end of January and analysts said the spotlight had swung away from supply disruption risks and back to fundamentals, particularly with robust stock levels seen in the United States.
"The market is expecting another significant jump in U.S. stocks later today, and this focus has pushed geopolitical uncertainties off to the side, for now at least," said David Thurtell, commodities strategist at the Commonwealth Bank of Australia.
U.S. crude oil supplies were seen rising 1.2 million barrels last week on high imports while refiners maintained their run rates, a Reuters survey of analysts showed ahead of U.S. government data due later Wednesday.
Gasoline inventories were expected to climb 1.6 million barrels on higher imports, making up for some loss of production due to seasonal refinery maintenance.
Total U.S. inventories of crude and fuels are already running about 6 percent higher than a year ago, government data shows, giving the world's top consumer a cushion against disruptions.
Analysts said planned refinery shutdowns could still take the shine off the healthier stock levels.
"A few more refineries going on scheduled maintenance and a tapering off on imports will bring stock levels back to that seen about a year ago," Thurtell said.
Asian demand
In China, the world's second-largest oil consumer, crude imports surged in January, up almost 70 percent from a year earlier to a record monthly high, customs data showed.
The huge growth was partly due to a low base the previous year, but experts said it was too early to expect a sharp recovery in Chinese demand this year, after sluggish growth in 2005 followed a surge in 2004 that helped drive oil's rally.
In India, domestic oil product sales slipped 1 percent in January versus the previous year, though diesel and petrol sales grew, an industry official said.
In Japan, the world's third-largest oil consumer, crude stocks edged higher last week as refinery rates fell, but remained near 30 year-lows after strong winter demand to make heating oil, industry data showed.
Traders were also watching the potentially bullish tension between the West and Iran over its nuclear program.
Officials close to the International Atomic Energy Agency (IAEA) said the agency's inspectors had witnessed Iranian scientists putting uranium hexafluoride gas into a small number of centrifuges, machines that convert uranium into fuel for nuclear reactors or, if enriched to high levels, warheads.
"All eyes are still waiting to see what happens with Iran, and what the outcome will be when the IAEA makes its report to the U.N. Security Council next month," Thurtell said.
The West fears that any sanctions against the fourth-largest oil exporter could see Tehran enforce an embargo on oil exports.
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