Oil price firm before weekly US energy report

21st July 2010, Comments 0 comments

World oil prices rose slightly on Wednesday as many traders stayed on the sidelines ahead of a closely-watched inventory report on US energy supplies, analysts said.

New York's main contract, light sweet crude for delivery in September, gained 54 cents to 78.12 dollars a barrel.

Brent North Sea crude for September added 62 cents to 76.84 dollars in afternoon London trade.

Oil had also climbed in subdued trade on Tuesday as the market anticipated falling US crude oil reserves and kept an eye on a possible tropical storm brewing in the Caribbean.

Later on Wednesday, the US government's Department of Energy will announce its weekly report on energy stockpiles for the week ending July 16.

"Today, eyes will be firmly back on fundamentals" of supply and demand, said VTB Capital oil analyst Andrey Kryuchenkov.

"We expect an up to 1.5-million-barrel draw (fall) in US crude inventories on the back of falling imports."

A drop in American oil inventories would indicate strengthening demand for crude. The weekly snapshot is considered a key indicator of demand in the world's biggest economy.

The average analyst forecast is that US crude oil stockpiles fell by 1.1 million barrels last week, according to a Dow Jones Newswires survey.

Market sentiment was also cautious following recent mixed economic data and disappointing US corporate earnings reports.

On Tuesday, computer giant IBM and Wall Street investment bank Goldman Sachs announced that their profits had slumped in the second quarter.

The disappointing earnings reports hit market sentiment, which was further weakened by a mixed report on the embattled US housing market.

Investors were also watching a tropical system brewing near the Caribbean island of Hispaniola, which could head towards the Gulf of Mexico, home to roughly 30 percent of US petroleum production.


© 2010 AFP

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