Oil stays below $88 on ample US stocks

AP News
Posted: Dec 06, 2012 8:35 AM
Oil stays below $88 on ample US stocks

The price of oil hovered below $88 a barrel on Thursday as mounting evidence of ample seasonal U.S. crude stocks was partly offset by ongoing worries over the Middle East.

By early afternoon in Europe, benchmark crude for January delivery was down 27 cents to $87.61 a barrel in electronic trading on the New York Mercantile Exchange. The contract fell 62 cents to finish at $87.88 per barrel on the Nymex on Wednesday.

Brent crude, which is used to price international varieties of oil, was down 46 cents to $108.35 a barrel on the ICE Futures exchange in London.

Oil prices have struggled for direction after figures Wednesday from the Energy Information Agency showed U.S. oil inventories well above average for this time of year, suggesting that demand from the world's largest economy may be a little less than anticipated over the winter months.

However, offsetting that impact on prices is a growing concern that Syria might be readying chemical weapons to use against rebels trying to overthrow the regime of President Bashar Assad. Worries over an escalation in the conflict have ratcheted up fears of a supply disruption of crude from the Middle East.

On Thursday, Germany's Cabinet also approved the dispatch of German Patriot air defense missiles to protect Turkey against possible attacks from Syria, a sign that tensions in the region were far from easing. It was also a major step toward a potential Western military role in the Syrian conflict.

Syria isn't the only Middle East concern. In Egypt, five people died and over 600 were injured in clashes between supporters and opponents of President Mohammed Morsi, the democratically-elected leader who has assumed near-absolute powers.

"The oil price should not fall any further, as this is precluded above all by the ongoing risks to supply due to the geopolitical tensions in the Middle East," said a report from Commerzbank in Frankfurt. "Alongside Egypt, Syria, Gaza and Iran all remain latent trouble spots, thus justifying a risk premium on the oil price."

In a commodities report, Goldman Sachs forecast the average price for benchmark crude in 2013 at $105.50 per barrel and at $99 per barrel in 2014.

In other energy futures trading on the Nymex:

— Heating oil rose 0.22 cent to $2.9929 a gallon.

— Natural gas added 1.8 cents to $3.718 per 1,000 cubic feet.

— Wholesale gasoline was up 0.74 cent to $2.6452 a gallon.


Pamela Sampson in Bangkok contributed to this report.