Oil prices firm before US energy report

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Oil prices drifted higher on Thursday in subdued holiday trade as worries over crude producer Iran were offset by concerns over the impact of the eurozone debt crisis on global energy demand.

New York's main contract light sweet crude for February delivery, known as West Texas Intermediate (WTI), added 29 cents to $99.65 a barrel.

Brent North Sea crude for February rose ten cents to $107.66 in quiet early afternoon London trade.

Crude futures sank in volatile year-end deals on Wednesday, as traders took profits and eyed the strong dollar, new concerns over the eurozone debt crisis and fresh equity falls on Wall Street.

"It seems that the oil market is on a holiday mood, as crude oil prices are trading within the recent narrow range following thin trading volumes," said Sucden analyst Myrto Sokou.

"WTI crude oil consolidates around $100 per barrel, while Brent oil remains fairly flat at $107 area.

She added: "The main focus for today will switch to the release of the weekly oil inventories figures that could provide a better insight about the levels of the US oil supplies."

The US government's Department of Energy will later publish its weekly snapshot of crude inventories for the week ending December 23.

"Overall, we expect to see an crude inventory draw (fall) of up to 2.0 million barrels on the back of falling imports, with refineries also drawing on their existing stockpiles," said VTB Capital analyst Andrey Kryuchenkov.

"A crude draw here would help to support WTI prices in thin holiday trading, with little else on the agenda today."

The US is the world's largest oil consumer and a gain in its inventories would imply a slowdown in its energy consumption, which would drive oil prices down.

Prices were tempered by Wednesday's weekly report from the American Petroleum Institute (API), which showed a spike in US stockpiles instead of an expected drawdown, analysts said.

API statistics showed a 9.6 million barrel gain in US stockpiles last week while analysts had predicted a 1.9-2.3 million barrel fall.

The row between Iran and the US continued Thursday as Washington warned Tehran not to close the Strait of Hormuz -- the world's most important oil transit channel -- after Tehran's Iran's navy chief said it would be "really easy" to do so.

The strait is a strategic choke point linking the Gulf's petroleum-exporting states to the Indian Ocean.

Meanwhile on Thursday, traders kept a keen eye on the strong greenback, which makes dollar-priced crude more expensive for buyers using weaker currencies, like the euro, and this tends to dampen oil demand and prices.

The European single currency slumped on Thursday to the lowest dollar level in more than one year, as Italy's latest bond auction reignited fears over the eurozone crisis in thin holiday-week trade.

Just after midday, the euro tumbled to $1.2858 -- the lowest level since September 14, 2010. The unit also sank against the safe-haven Japanese yen, striking 100.06 yen -- last seen in June 2001.


© 2011 AFP

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